Who Will Pay for Scott Walker's Cuts? Hint: It's not the wealthy
Wisconsin is broke, Gov. Scott Walker has claimed, and it's time to balance the budget.
In order to close an estimated $3.6 billion deficit, Walker, the son of a Baptist minister, is asking only Wisconsin's middle-class and lower-income residents to make the sacrifices. If you send your child to a public school or one of Wisconsin's universities, you will feel this budget squeeze. If you are a teacher or other public employee, you will feel this budget squeeze. If you are a lower-income resident in Wisconsin, you will face an even more difficult battle.
It makes little sense to cut state spending during an economic downturn. Services provided by the government—such as subsidized health care, public education, job training and public sector employment—are needed to help Wisconsinites during a recession and to ensure that workers have money to spend at local businesses.
Conversely, cutting salaries and safety net services will cause the economy to shrink, since fewer people will be able to afford anything more than the bare basics and the state will be able to collect less income and sales taxes. An estimate by the Institute for Wisconsin's Future found that the effects of the wage and benefits concessions agreed to by the state's public sector unions will put more than 9,000 private sector jobs at risk.
But that's not the only reason why Walker's budget repair bill and proposed 2011-2012 budget—which cuts $4.2 billion in spending—is so alarming.
Combing through the details of Walker's proposals, there's little sense of shared sacrifice, the notion that everyone should contribute what they can to the common good. Those who can contribute more should be asked to do more.
But Walker is only asking some of us to make sacrifices. In one of the most regressive budgets ever introduced in this state, Walker is giving wealthy investors and business owners tax cuts, while the rest of Wisconsin residents will be faced with cuts in salaries and services. Even worse, Walker is limiting local control over property taxes, so that communities that want to increase funding for schools, fire and police services and garbage collection will be unable to do so—unless a costly and time-consuming referendum is held.
"This is not what Wisconsin is all about," Assembly Minority Leader Peter Barca (D-Kenosha) said at a community meeting on Saturday at the Parklawn Assembly of God. "It's almost like there's a battle for the soul of the state."
Slashed Services and Tax Increases for the Working Poor
Here's how Walker's budget will impact the state's most vulnerable residents:
- With more than $800 million in reduced state aid, public-school children will shoulder nearly one-fifth of the cuts Walker is making. Milwaukee Public Schools will be hit especially hard. (For details, see "Is This the End of Milwaukee Public Schools?" on page 10.)
- Students in the Wisconsin Technical College System will see funding reduced by $71.6 million over the two-year cycle.
- Wisconsinites on BadgerCare and other Medicaid programs are especially
vulnerable. Walker's exact plans for health care aren't entirely clear. One of
his proposed reforms would allow his politically appointed secretary of the
Department of Health Services to be able to make sweeping changes to Medicaid
programs under permanent "emergency rules." With "emergency rules," the
secretary's changes would not have to be approved by the full state
Legislature, but rather would only need the support of nine of the 16
legislators on the Joint Finance Committee. Even though this is potentially
unconstitutional, the state Assembly passed this item in the stalled budget
repair bill.
Some of Walker's reforms are clearly stated in his proposed 2011-2012 budget.
Walker would eliminate BadgerCare coverage for those who earn more than 133% of the federal poverty level, or $24,352 for a family of three. That would save the state about $90 million over two years.
It's difficult to imagine how a family at that income level would be able to purchase insurance in the open market, but that's Walker's plan for 55,000 Wisconsinites who would lose BadgerCare coverage. Since these families will likely go without health insurance, they will end up going to hospital emergency rooms, which cost several times as much as an office visit. The hospital will then write off these costs as "charity care" and pass on the real costs to those with insurance, which in turn raises the cost of health insurance for everyone in Wisconsin.
- Walker is eliminating, outright, funding for family planning services
for men and women between the ages of 15 and 44 who earn less than 200% of the
federal poverty level ($21,700 for a single person). Services include access to
contraception; cervical, prostate and breast cancer screenings; and sexually
transmitted infection (STI) screenings.
Leaving these health issues untreated will undoubtedly create more health problems and significant costs down the line, thanks to increased rates of STIs and pregnancies and the increased cost of treating cancer diagnosed later, rather than sooner.
- Most of the 91,000 individuals who are enrolled in SeniorCare for their prescription drug coverage will now be forced to enroll in Medicare Part D, a federal program that is more expensive and difficult for seniors to navigate.
- The Earned Income Tax Credit, a program championed by Republicans like Wisconsin Congressman Tom Petri, provides subsidies to keep the working poor in private sector jobs. Walker will slash the amount slated for this program by $41.3 million, thereby handing low-wage workers a $41.3 million tax increase over the biennium.
- Walker will change the way that the homestead tax credit is calculated so that $8.1 million is cut over the two-year budget. This will amount to a tax increase for more than 247,000 homeowners and renters in Wisconsin with a household income of less than $24,680.
- Employees in the Wisconsin Works (W-2) program would receive $20 less per month—$653 a month for those in a community service job or $608 for those in a transitional job—to provide a lesson about the value of work, according to Walker's budget.
- Walker is cutting funding for transit by 10%—about $7 million for the Milwaukee County Transit System (MCTS)—and moving its funding source from the state transportation fund, which is a segregated account supported by the gas tax and used for transportation expenses, to the general purpose account, where transit will have to compete for money with other state programs. In addition, by eliminating collective bargaining rights for transit workers, Walker is jeopardizing $46.6 million in federal funding for transit systems around the state. MCTS would likely be exempt from that federal aid cut, but the effect of Walker's general cut on transit would be devastating for the system. Look for pricier tickets, route eliminations and the end of the system as a reliable service throughout the county.
Perks for Investors, Road Builders and Tourists
But the news isn't bad for everyone, since Walker managed to provide some tax relief and increased funding for certain Wisconsinites:
- Walker is increasing funding for Department of Tourism marketing by more than $5 million to paint a rosy picture of life in Wisconsin.
- Walker is eliminating the income eligibility limits for the Milwaukee Parental Choice Program, so children of wealthy parents will be able to use tax dollars to pay for tuition at private or religious schools.
- Walker wants to spin off the University of Wisconsin-Madison from the rest of the UW System. That would allow UW-Madison to hike tuition and fees, making a college education even less affordable for the average student and his or her family. Shockingly, Walker is even looking into allowing UW-Milwaukee to do the same.
- Capital gains taxes are eliminated for long-term investors in Wisconsin businesses.
- During the special session on job creation, Walker and the Republican majority in the state Legislature handed out $140 million in business tax breaks that even businesspeople argue will do little to nothing to create jobs.
- At the same time as Walker is slashing funds for buses, he's increasing funding for highways by $410.5 million, a 14.7% increase, to $5.7 billion. These moves, in combination with his refusal of $810 million in federal funding for high-speed rail, will ensure that Wisconsinites depend on cars and freeways for generations to come.
Walker is the biggest idiot in the state of Wisconsin, maybe with him in charge we should rename the state "Confusion"!. Who will want to live in the state of Confusion, when the rich pay almost nothing in taxes and the working man forks the bill for his extravigent spending. It's about time that the rich start paying their fair share!!!!
Well annoyinus
while 50% of the population pays ZERO income tax, the top 5% pays almost 60% of total tax collected, yet they only receives 1/3 of total income. That is already extremely imbalanced how about the bottom 50% start paying thier fair share
Jim, everyone echoes that statistic of half the people pay 0 taxes. But, the error in that statistic is the payroll tax called FICA or Social Security. Through the end of 2010, every single one of those low income workers that paid 0 income IRS 1040 taxes was already paying 7.65% as a payroll tax, no possibility to file for a refund. In addition to that 7.65%, that workers employer had to match that amount dollar for dollar. That's a total of 15.3% of the gross amount seen on that workers paycheck, even on those who would have been untaxed due to standard deduction.
Even the worker who makes 100K still has that 15.3% of his gross making it's way into federal coffers.
I'll tell you who isn't paying that 15.3%, and it is people like David Koch. Why? Because 12.4% of that is only allowed to be collected on the first 106K. Net result, a person making even a cool million is only kicking in 3% of his million.
Perhaps only the second time I have agreed with the Waukesha Race Sentinel. There is absolutely no reason to cap FICA for the employee. I'd still cap it for the employer, and at a much lower level than the 106K. These amounts are insurance policies against unemployment and disability and your contribution to your government "pension". Never mind that the returns on that "pension" are currently slated to be negative for younger workers. Either way, making more money should not exempt you from these taxes- the way they work now, they are quite regressive.
If you think only the rich pay taxes think again. Back in 2007 I made 9000 . . . below federal poverty for household of 1. I paid taxes. But Bank of America made 1.7B in profit in 2009 and paid NO taxes thanks to the GOP tax loopholes.
The GOP only cares for the rich and corporations. They ignore everyone else. Bush screwed up this country, Walker screwed up this state.
I commend the Govenor for his stance on the Public workers Unions. they make on an avarage obout double for the same kind of work as the non Union workers ,and the non Union worker is paying for thier pensions as well as his own if he can afford to fund his own pension.Thank God we finaly have a leader whith some backbone and Christian morals.
Wouldn't the Christ-like thing be to pay private sector employees more and give them better benefits?
Double the average worker? I am a 5th year teacher who makes less than $35K/yr (take home). Bachelor's Degree in Biology & Education, finishing my Masters Degree in Education ($20K which I am paying for in loans) which puts my education requirements well above the "average" worker. Oh, and my "company" gives no financial aid for professional development, which many private sector comapnies do. How am I making double anyone in the private sector?
Well Mr. Anonymous, you poor thing, only $35k year take home. Well lets add on top of that your union dues, $25k in benefits, Fed tax, State tax, FICA and we are now up to about $80k per year gross pay. Not bad for someone in their 5th year. Especially for 180 days of work. Annualize that out to somone who works a normal 260 days and buddy, you are now up to $115,000 a year. All you got to do is pick up another similar job during the summer you are now into 6 figures. Congraduations on your success. I remember years when I was well into six figures and my take home was zero. I know how to play that game so don't try to b.s. me with this "take home" crap. Actually my take home pay is pretty much zero every year. About 99% of it goes to taxes and pension expenses.
Anonymous- are you really citing those figures and whining about them? In the private sector, I made about $37K (with two bachelors degrees) in my 5th year- with crappy benefits and no pension or 401K. This was due to a poor choice of specialization in college- MY poor choice.
The private sector is not offering much in the way of tuition reimbursement anymore. I don't know a single person who is receiving anything in the way of education funding from their employer. You, on the other hand, are almost certainly guaranteed a raise when you finish your Masters. How nice for you.
Get a grip, or get another job if yours is so terrible.
for anon and ppygm - it is this type of discourse that enables the haves to continue to cripple the haves less. I sucks that a teacher only takes home 35k and i REALLY sucks that a person with two degrees should earn less either way both of you are being affected by our government allowing businesses and wealthier citizens to screw us over. The sooner we quit acting like crabs in a bucket the sooner we can take action and improve life for EVERYONE!
@Kimberly- do you have anything specific or rational to add to the conversation? You seem to have strong feelings on the matters at hand, but platitudes and telling us what "sucks" doesn't add much. It's easy to rail against big business- but the fact remains that everything comes from thriving businesses (I know I'm a broken record)- income taxes, corporate taxes, property taxes, unemployment insurance- everything that funds the government comes from business. Everything that the government redistributes comes from business. So, exactly what do you propose we do?
Thanks Political but no thanks. Insults will get you no where. You're insistence that "everything comes from thriving business" is a slight bit misguided. Everything came from thriving businesses & a thriving public. There was a time that big American businesses needed Americans but that time has passed. But Im sure you know that and I am sure you have common sense. Can't you see that needless in fighting amongst the working poor facilitates the problem. You are rallying for a club that you don't belong to. So no, I don't have a definte answer to resolving our budget crisis but I can tell you what I plan to do now and come November and that is to join the fight to put Walker and every Senator who helped pass this bill out of office.
@Kimberly- so in other words, no, you just have platitudes. What "club" are you talking about? If government revenue comes from somewhere other than business, please tell me where? What do you even mean by a "thriving public"? Do you maintain that the public can thrive without successful businesses? Like in Cuba, right? Or maybe the (now defunct) Soviet Union? Even Sweden is not really socialist- the Swedes count many, many successful businesses as corporate citizens.
You go do your thing with the recalls, and I'll do mine. Based on the complete lack of a single actual fact in your post, I think I'll do better.
Good for Gov Walker for cracking down on the scammers who purposely make low wages so they can qualify for handouts. We know that someone making $24,000 a year is probably working under the table for cash making more money but doesn't report it so they can scam the state. Generally people are greedy by nature and not that lazy. One thing I know about people is that if they want to make money, they will find a way to do it. Thats why the Gov. is making to the cuts so people will have an incentive to go out and make more money. I know too many single moms who opt to work 32 hours instead of 48 because they would lose their food stamps and Badgercare. Or the waitress that makes $800 a week in tips but says its only $200. If someone is smart enough to wade through the welfare system and figure out all the ways to scam the state, they are smart enough to work hard like everyone else. W2, Badgercare, Food Stamps, Earned Income credit, etc, those are just incentives for people not to give 150%, work 50 hours week, and go out to make a lot of money on their own. Once we ween them off welfare, people can be very ingenious and will figure out a way to make it on their own. Then as more people opt into the workforce, they will pay taxes. And if they are working off the books for cash, well at least they are off the welfare rolls. Only the poor and lazy will be punished. Normal people will be able to send their kids to private schools. Normal people will get a break on capital gains. A lot of us are getting hit hard right now with CG taxes since the stock market has come roaring back. If you want to attract wealthy people and corporations to Wisconsin, you have to make it affordable for them.
"400 obscenely rich people, most of whom benefited in some way from the multi-trillion dollar taxpayer "bailout" of 2008, now have as much loot, stock and property as the assets of 155 million Americans combined. If you can't bring yourself to call that a financial coup d'état, then you are simply not being honest about what you know in your heart to be true."—Quoted from Michael Moore's Mar. 5 speech in Madison.
Michael Moore - well he might be right. But there are always going to be ambitious people who choose to accumulate wealth. And there are alwys going to not so abitious people who chose not to hold on to their wealth. From my experience, when you redistribute wealth, some people aways find a way to lose it and some people always find a way to get it back.
"Only the poor and lazy will be punished."
Really?! I Am A Full Time Student, Who Is Working A 32 Hour A Week Minimum Wage Job. I Receive Foodshare, As Well As A Tiny Subset Of BadgerCare, Called The Family Planning Waiver. Which Does Not Cover Anything Besides Some "Women Issues." So If I Get The Flu Or Some Other Type Of Ailment I Have To Go To Urgent Care Or The E.R. Both Of Which Would Then Bill Me An Outrageous Amount Of Money, Which Obviously I Can Not Afford.I Work My Butt Off Everyday. Some Of My Days Are 12 Hours Long Between Work And School. If I Were Not To Receive Foodshare, There Would Be Numerous Times Where I Would Barely Have Money For Food To Eat. You Need To Look @ Things On A Case By Case Basis. Everyone Is Not Everybody. Some People Are Really Doing The Best They Can, Which Is Still Not Enough, So They Need Help. Granted, Yes, I Will Not Disagree That There Are Quite A Few People Who Take Advantage Of These Programs, But Stop The Generalizing.
djl, I'm sick if hearing that common line of yours. You got ousted from your job, so you had to "choose" to make money, go out and start a business since nobody wanted to hire you.
You are into "research", you know full well that a region can only support so many stores. The logic of "get out and make a job if you can't find a job extends out falsely like this... Double the amount of stores, means double the amount of money taken off the customers, problem solved... It's a lie!
You know as well as I do, add another store to a saturated region, and you divide up the fixed amount of paying customers among all the stores in that region, everybody loses, and one more CEO trying to pay himself a bonus. At some point, the entrepeneur must LEAVE THE REGION and go to where there is money waiting to be spent!
Let me see Scott Walker provide government paid one-way tickets out of the state. Ya think that would solve Wisconsin's problem? Maybe, but it won't solve those ousted people's problem.
That's the truth of this "fix", the conservative taxpayers fully intend all those who are cut off to siimply get up and go elsewhere! Where? the other states are in the same jam, and other countries are in the same jam too.
This also outlines the falseness of Reagan's "trickle down" economics. If the tax break for that rich were to be spent here in the US, it could have worked, But when they feel that the US is saturated, so they take that money they made in the USA to an emerging economy where there is money waiting to be collected, then it sure isn't trickling down here on a US Main Street.
Yes Waukesha dude, I agree, we must expand into new areas to make money when one area is saturated. I'm am damn lucky to find any work in Wisconsin. About 95% of the time I must travel all over north America to find new projects to work on. Thats the problem with a lot of unemployed people, they only look in there back yard and not worldwide. Look at what the illegal immigrants do - they will go where the work is, not wait for the work to come to them.
I feel bad for Jai, sounds like she is trying hard and not getting ahead. I would suggest hooking up with an ambitous man who is into making money. Its a strategy often used by women since the beginning of time.
Michael C - not sure if you realize that $35k the other guy was talking about is TAKE HOME,. He's got to be grossing $50k plus and another $25k worth of health insurance, disability, and pension premiums. TAKE HOME is a misused term. For years my take home pay was nearly zero and still is. It all went to taxes, health insurance, alimony, and retirement. Sure I live off other income producing ventures, which was my choice to do so. I got bi-atch slapped by a family court judge once for hiding income through a zero net pay scheme. Take home means nothing - gross pay plus the value of all benefits -- thats what counts. That what the taxpayer is on the hook for.
All of you talk good game, until it comes down to you, yours and whatever personal situation that you come up with. When the shit hits the fan, which it will-please don't start crying that same ole tune. It's good to talk shit but please be able to back it up. It will catch up to you soon. Enjoy the great Scott Walker! An empty barrel makes a lot of noise.
djlresearch better do some more research. Teacher contracts are 190 days. Point 2: a teacher making 35K has about 10% of their salary defferred to their pension - a whopping 3.5K. If he/she is on the single insurance plan, that adds another 6K for a grand total to the taxpayer of 44.5K. If the person takes a family plan, add another 10K. But since the teacher has a plan that covers their spouse, the spouse need not burden his/her employer w/ insurance costs. Saving that private sector employer $$$. I hope djl is ready to have BILLIONS of $ drained from the state economy. I just wonder how he's going to live on even less income when he says his net income is already near zero. Talk about a shitty businessman! He better hope Badger Care is there to catch his sorry ass when his business goes under and he needs an appendectomy or a brain implant!