A low volume, high quality source from the demand side perspective.The podcast is produced weekly. A transcript is posted on the day of.

Tuesday, August 29, 2006

Prediction Tuesday: GOP will cave on sales tax deduction

Several weeks ago Maria Cantwell charged up the blogosphere when she posted here at NPI ("Washington State's Working Families Deserve Better") explaining her vote on the minimum wage bill. Senator Cantwell pegged a gratuitous gouging of tipped workers in the bill for what it was, a cynical Republican ploy.

But that bill was called the "trifecta" by its sponsors because it also included a bill eviscerating the estate tax and another, the "extenders," which was an extension of several actual tax breaks for actual Americans that might actually help somebody besides the rich -- namely the R&D credit, the higher education expense deduction, and the state and local sales tax deduction.

This last part - the sales tax deduction - is worth hundreds and thousands of dollars to individual Washington taxpayers. Residents of most other states have long enjoyed deduction of their state taxes, because most have an income tax, and state income taxes have been deductible since they were invented. Citizens of states without income taxes got deductibility of their sales taxes only recently.

The prediction this Tuesday is this: When this pathetic Congress reconvenes in a few days, if it does nothing else, it will pass out the extenders. Harry Reid (D-NV), Senate minority leader, has promised to move the bill. Whether he gets a chance or it becomes sweetening for another Republican poop pie is a matter of arcane Senate rules that are beyond my ability or interest to fathom.

I do know, however, that among the other states in the same boat with Washington are Texas, Florida and North Carolina. And I know that in the spring Republicans used some of those arcane Senate rules to extend a dramatic reduction in dividend and capital gains taxes [which apply if you are too rich to use a 401(k)] out to 2011. Will they really go home in an election year having to explain they were so busy taking care of the rich they couldn't deliver actual value to their constituents?

Also, a repeat of a late addition to the last Prediction Tuesday: Anyone who wants to explore apprenticeship opportunities in Washington should start at the Labor & Industries website that shows a full listing of the programs and application procedures. If you want a career with a future in a skilled trade, check it out.

Sunday, August 27, 2006

A word in favor of "corporate subversion"

"From a marketing point of view, you don't introduce new products in August"

- Andrew Card, White House Chief of Staff, September 2002, on the rollout of the Iraq War.
What "product" the Bush machine has in mind for us this election season remains to be seen. But I am ignoring Card's advice and rolling out my own product without waiting for the end of August. That product: "Corporate Subversion."

Yes, I know, the term has undoubtedly been used before, but I feel it deserves special attention and incorporation into our lexicon this season and for the rest of our political lives. The term can be an antidote for many things and a convenient catch phrase to fall back on when we need time to gather our thoughts. In this way it is similar to the Right's "tax and spend," "cut and run," and "activist judges."

"Corporate Subversion," however, has benefits not possessed by the Right Wing's subriquets:
  • It is true. Corporate interests have subverted virtually every aspect of the government and the society. (See list below.)

  • Most Americans agree. Poll after poll shows a substantial majority of Americans believe corporations exert far too much influence -- subverting the government and the society. This sense becomes particularly active around clear examples of corporate malfeasance, for example, the Enron collapse and subsequent trials. This anti-corporate sentiment is a key to the progressive majority which is the base for resurrecting our democracy.

  • It applies across the board. As above, and below, corporate subversion is ubiquitous and disastrous. Thus, using this term virtually anywhere is appropriate.

  • Raising awareness of and countering corporate subversion will make a difference. This is more or less a corollary to its being true. The difficulty with the Right's hot buttons is that they are only good for agitation value. You can hit the button a million times, but it doesn't fix anything and usually only makes matters worse. This is the problem with being dissociated from reality. "Corporate Subversion" is connected to reality.
Use it early, use it often:
Corporate subversion of the election process
Corporate subversion of campaign finance
Corporate subversion of health care
Corporate subversion of foreign policy
Corporate subversion of rebuilding Iraq
Corporate subversion of energy policy
Corporate subversion of environmental controls
Corporate subversion of media
Corporate subversion of Agriculture
Corporate subversion of transportation systems
Corporate subversion of trade policy
Corporate subversion of scientific research
Corporate subversion of government
Corporate subversion of education
Corporate subversion of the economy
Corporate subversion of tax laws

and so on.
Bonus Phrase: In honor of Dick Cheney, who four years ago today said:
"There is no doubt that Saddam Hussein now has weapons of mass destruction. There is no doubt he is amassing them to use against our friends ... and against us,"
This corner is giving a sneak preview of

"Brutal Stupidity."

This phrase is still in its developmental stage, but it promises to be the perfect antidote for "cut and run" and "weak on terrorism" and lead the conversation into torture, erosion of civil rights, and lack of results from enormous expenditures of blood and treasure.

(Special thanks to Mother Jones.)

Saturday, August 26, 2006

Raid the Red Zone with Richard Wright

WA-04 is an opportunity to elect an independent Democrat and get rid of a Republican party hack. Doc Hastings is known for little else but rolling over for corporate interests and the party bosses.

He was directly complicit in the Medicare Part D drug fiasco, having personally held the vote open long past its appropriate conclusion so additional lawmakers could be frogmarched into the chambers to pass the thing.

The result: Eight months of needless confusion followed by endless years of billions in excess profits to pharmaceutical corporations.

Who was the chairman of the House Ethics Committee during the past two years, years of unparalleled corruption, corruption that brought down the once-invincible "Hammer" DeLay?

It was Doc Hastings, from right out there in Central Washington. Friend to Jack Abramoff. Yes, lovable Doc Hastings. That's not a farmer's tan he's wearing.

You'd think Hastings would have gotten some goodies for his home district with all this abetting of corporate subversion, but no.

Hanford remains a problem. NAFTA -- which Hastings was told to vote for, so he did -- has burned Central Washington farmers who can't compete with the low-wage countries.

Doc is just warming a seat for the GOP until he can move out onto K Street in the other Washington.

Hastings web site is featuring his bill on the Kennewick Man. Any real platform is hard to find. Iraq is AWOL. On trade, he has managed to translate "mealy-mouthed" into print.

If you want answers on agriculture, talk to Peter Goldmark in the 5th.

Hastings' photo ops are in front of V.A. facilities at the same time he's supported the Bush budgets which screw veterans. And he's the last man alive who still professes to believe the Bush garbage about Social Security.

Hastings has no answers except the tried and true. Blame it on activist judges, he told a recent water resources meeting, and he proceeded to call out the "activist" Portland judge. Cut taxes, is a favorite. Never mind exploding debt or high-priced wars.

Perhaps his highest profile issue is tax cuts. He has wrapped himself in the estate tax. Who in his district is subject to the estate tax, I don't know. Likely less than .00001 percent of the voters. (Farms are exempt.)

Why do I know Richard Wright will be independent? Because he has not gotten the support he deserves from the Democrats, either state or national. It's as if they think Central Washington is too dumb to hold Hastings to account.

This is the year when lock-step Republicans get walked off the plank -- it's in the polls. But with support from the party absent, Wright will have little incentive to hold too close to the party line when he's elected. Voila, independence! That may be a good thing considering his district.

This next month is critical. Support the Wright campaign at the official site. Or if you want to wake up the DCCC, write in Wright at the DCCC's site. That is, click on the link and type "Richard Wright (WA-04)" in the "Other" space.

The picture is Doc fresh from his official House web page.

Wednesday, August 23, 2006

Darfur: Highlight the hypocrisy

Ending the catastrophe in Darfur is within our capacity. That gruesome destruction of life needs to end as soon as possible for the sake of all our souls.

It is do-able. We can rejoin the community of nations if we lead NATO in enforcing an end to the atrocities there immediately, not after five more months of slaughter as is currently envisioned.

Darfur stands in stark relief against the quagmire of Iraq. By raising our hand in protection of basic human rights, such as the right to life, we show strength that arises from conviction and correctness and that action does not have to be -- as it is in Iraq -- accompanied by stupidity, coercion and deviousness. Darfur is a crisis where the mission can be clear to our forces and results can be attained.

Raising the profile of this calamity can highlight the hypocrisy of the Bush foreign policy -- American domination focused on oil for the benefit of corporations.

John Edwards, former Democratic candidate for vice president, has an urgent plea out right now. Edwards is the essence of a bleeding heart liberal. His compassion ought to be emulated by us all. You can act through his web site, or at the Save Darfur website, or get deepeer into it at DarfurGenocide.org. A summary of the recent history is available at Human Rights Watch.

Monday, August 21, 2006

We got rolled

A new mythology is arising about Iraq, that an intricate web of lies from Bush and Cheney duped a credulous public into supporting the preemptive attack. Mother Jones has a good chronology in the latest edition.

Yes, there were lies. The mythology, however, is that intelligent people didn't know what was happening. Most of the people reading this right now knew.

If you think back, it was not the lies themselves, but a campaign of hysteria and character assassination and jingoism surrounding the few pallid lies that forced the door open for Bush's invasion. We were rolled by a Karl Rove media campaign.

Many, many knew the drumbeat of lies was fabricated. If you recall those days, and you had any sense, you remember objecting and protesting, and you remember it was like shouting into a hurricane and having your voice swept away. Europe, out of the reach of the propaganda machine, knew. Many here knew with certainty and put up their "Attack Iraq? NO!" and "No Iraq War" signs.

Those signs are still up. We knew the American onslaught had to be pushed in over the tops of the weapons inspectors, not because an attack by Saddam was imminent, but because a clean report from the inspectors was imminent.

It was, in fact, the need for an overt campaign for the war that most betrayed its illegitimacy. A preemptive strike halfway around the world -- If you don't like it, you are unAmerican or a sissy or stupid. And look, here's Colin Powell at the UN with his dog and pony show.

There is no good war, but the only legitimate wars are those we are dragged into, wars as a last resort. If you need a parade to get people out for a war, it is not going to turn out well.

The mythology that nobody knew what was going on because of Bush lies may give a couple of dozen Democratic senators some cover, but it masks things more troubling.

One, the Rove campaign/propaganda machine is still in place and still armed with the same weapons of hysteria, character attack, and jingoism, the methods and means of turning a few lies into a tide of public opinion.

It will be rolled out soon in support of the Republican Congress, timed to reach its crescendo the first week of November. We will need to take the opportunity of this campaign to expose the dirty business.

Two, the Bush goal was reached. We are stuck in Iraq. The only way out is through. This does not mean abandoning the soldiers to their role as ducks in a shooting gallery. It means getting them into defensible locations, and giving them missions that have clear definition and a prospect of success.

It means getting the corporate vultures like Halliburton out of there and getting the country rebuilt. To my mind, it means partitioning the country into areas which can be policed and protected by the indiginous populations.

Three, the lies and the media campaign and the process of enforcing this blunder, with its underlying policy of American World Dominance, have FEMA-ized the State Department and the military. The competent people who objected have been shown the door, quit in disgust, or have muffled their competence in order to keep their jobs. The ideologically driven boobs are left in the offices, pushing the same buttons and getting the same bloody, bogus results.

The whole mess has left us a dozen times less secure than before the attack.

Friday, August 18, 2006

Mexico Election irregularities: Democrats need to wake up

The presidential election of July 2 is not over in Mexico. Widespread irregularities have been documented. Manuel Lopez Obrador and millions of his supporters are demanding a vote-by-vote recount. The elections commission has authorized a recount of only 9 percent of the polling places.

Election fraud is an issue that needs to be front and center in the USA in November. We need an alert press, and an alert public.

Why no complete recount? What is the downside of a damned recount?

The only downside is a potential loss for the right-wing candidate Felipe Calderon. If he wins a recount, he has legitimacy. If he loses, democracy has won.

In the States, aside from the generous insult to our neighbors to the south by ignoring this event, the downside is the bungling of a chance to prepare the public and a listless media for shenanigans when our own elections roll around. Democrats need to say this is a serious problem. We need to say we are not going to interfere, but if the same situation occurred in the United States, we would want a recount. Elections are the most important process of a representative government. They are just short of sacred. They need to be completely above suspicion.

If Democrats want to say more (and they don't have to) they can roll out a list of improvements, such as at Vote Trust USA (who also are ignoring this event). They definitely need to stop short of whining about the last election. Let the press "discover" those events. It shouldn't be hard.

We posted on this when the election commission rolled out its partial recount decision and the occupation of Mexico City began. Lopez Obrador is not a sore loser. He knows he has won. If he hasn't, what's the problem with showing him?

Where the hell is John Kerry on this?
Where is Al Gore?
Jimmy Carter?

This is the time to stand up.

Thursday, August 17, 2006

Tax Force shoots Tacomans in the foot

After six months of deliberations and analysis, Tacoma's Revenue Task Force passed overwhelmingly a proposal very similar -- as similar as possible -- to the city manager Eric Anderson's original proposal, minus only any mention of nonprofits.

Although details are very sketchy, possibly by intention, it is clear that in order for tax revenue to increase by 6 percent, one target, the city's tax bill for a resident would double. A remarkable achievement.

Notice I didn't say the property tax bill. This is the total tax bill, after allowances for the elimination of the city's B&O and local option Sales tax.

Double? How is that possible? Answer: Because of (1) a net shift from businesses to homeowners and (2) an end to the taxes that can be "exported."

Property is disproportionately residential, so a shift to a property base would shift taxes from business to residents. Sales and B&O taxes are to some extent exported. This quality is underappreciated on the Tax Force, although the 2002 Gates Commission report had only good things to say about it, specifically, "The [jurisdiction] should minimize the tax burden on [its] taxpayers by choosing a tax system that maximizes the extent to which taxes can be exported (paid by nonresidents)." The Commission goes on to give helpful examples. But we have our own.

A Tacoma shopper in a Puyallup store pays into that city's sales tax. The Puyallup shopper returns the favor in Tacoma. The tax burden in each case is exported to the other's city. Add to this the situation of manufacturing and other businesses whose customers dwell outside the city and who pass the B&O across the city's boundaries along with the goods.

The owner of a $200,000 home in Tacoma would see their property tax bill rise by about $1,500. [Mind-numbing details of these calculations are below.] But they would lose, generously, a little over $400 in retail B&O and city option sales taxes. The net boost to the city's revenue stream is 6%, remember. The net boost to the city's portion of the resident's tax bill is 115%, more than double.

Here's the calculation (and an illustration of the type of discussion I enjoy, but which puts others to sleep).
Assume the city's property tax rate is $3 per thousand (about halfway between the 2005 and 2006 rates). The current contribution of the property tax is 22 percent of the General Fund. The target for the City Services Tax (CST) levy is 80 percent. (More, actually, 40% police, 30% fire, 6% library, 4% administration, and the 6% increase to fill the projected gap, or 86% of current GF revenues.)

Increasing the CST levy from the current 22% to 80% is a factor of 3.64.

Using our $200,000 home as an example. Currently the city's portion of the property tax bill is $600 (200 x 3). Under the CST, it would be, yes, 3.64 times this, or about $2,180.

BUT, the plan calls for the removal of the city's 1% local option sales and its B&O taxes. So the homeowner loses a burden associated with those taxes. Great! How much is it?

Assume a resident spends $3,000 per month in Tacoma (not Puyallup) on products and services subject to the sales tax. (Food and drug purchases would not be subject to the sales tax, but we'll pretend they are. Have to be conservative.) Assume the B&O tax on the retail sector is paid by consumers. Assume the B&O tax on other sectors (manufacturing, services, construction, etc.) is paid by businesses or their out-of-city customers. Enough assumptions.

The city's local option sales tax bite would be $360 for the year ($3,000 x 12 x .01). The retail portion of the B&O would nip another $55 ($36,000 x .00153). For a total cost to this homeowner of the Sales and B&O taxes of $415.

Thus, the current bill = $1,015 (600 + 415)
The proposed CST levy = $2,180 (as above)

Just hit me with a rubber hose.

caveat: Utility taxes remain the same under both the current and proposed schemes.

note: Last week's "consolidated proposal" raised the same revenue with no increase to the property tax. It's burden to a resident would be identical to that above.
At least we saved the nonprofits.

Friday, August 11, 2006

Questions for Joe (Lieberman)

Former Democrat Joe Lieberman lost no time in aligning himself with his new party, trotting out the long-discredited Bush association between Iraq and 9-11, and trying to paste it onto the airline bomb plot uncovered by the British.

A few questions for the former Democrat might clear things up. (The correct answers are in parentheses.)

How many Iraqis were involved in the airline bomb conspiracy?
How many from American allies?
What is the connection between the airline bomb plot and Iraq?
Will the British put the plotters in Gitmo?
Will they be subject to torture?
But even innocent people are "disappeared" and subject to torture, we know these guys are guilty.
(No response)
Is Karl Rove handling your PR now?
(He's certainly offered to).

Saturday, August 5, 2006

Saturday at the Races - Polls and Trolls

Joe Lieberman is trailing by six lengths going down the stretch, but the race in Connecticut isn't over yet. (The Quinnipiac Poll puts it at 54-41 Lamont). An LA Times poll shows that the environment is a winner for Democrats, with the issue growing in concern to voters and Democrats seen as best able to address the problem of global warming, by 49-12.

The real eye-opener is an NPR poll aggregating the 50 most competitive Congressional Districts (40 Republican, 1 Independent, 9 Democrat):
  • Only three in ten plan to vote for the incumbent
  • Democratic voters are more motivated, but interest is high across the board. (Look for an all-out October smear, as Republicans try to hold down the vote.)
  • Democrats are ahead in both generic and named candidate responses. That is, both specific and general.
  • Democrats are up in seats held now by Republicans by +4. In seats currently held by Democrats, they are +31.
  • Democrats lead in the 23 "top tier districts" 53-43, but they also lead in the other 27 by 47-44.
  • Quoting: "In 2004, the total vote in these 50 districts went Republican by about 12 points. In our current survey, voters in these same districts say they would vote for the Democrat over the Republican by about six points."
  • GOP manufactured hot button issues -- gay marriage, stem cell research, flag burning have the attention of many, but they have not pushed the economy or Iraq off the viewscreen.
  • Independents look a lot like Democrats on many issues.
A Pew Research poll out this week showed Republicans are turning off the news when in comes to Iraq, and indeed are tuning out all foreign affairs news, with 18 percent fewer following Iraq "very closely" now compared to April 2004. Iraq viewership among Democrats is -5 over the same period, and -9 for Independents. For general international news it's -20 for Republicans and -9 for both Democrats and Independents.

Bush's approval-disapproval ratings have held steady since June at around -20 (58 approve, 38 disapprove) in an average of five polls. This is a plateau (or an underwater shelf) after a steep slide which began in January.

Larry J. Sabato at UVA publishes his Crystal Ball, which seems to be clearing a bit for him. Only a month ago he was predicting just a "micro-wave" for the Democrats. Now it's up to a net gain of 12-15 House seats and 3-6 Senate seats. It needs to go higher.

Donkey Rising reports that voter turnout efforts by Democrats, including the DNC, may be a weak link on election day. Nancy Pelosi, among others, has been critical. One long-time operative said, "The last-minute, throw-money-at-it approach ... does not really solve the fundamental failure to organize .... The DNC is moving in the right direction, but needs to do more, fast."

In Washington, Darcy Burner is doing well enough that push-pollers (negative calls disguised as polling) have been reported already.

Peter Goldmark may get some more serious help now that he is showing well v. Cathy McMorris in the 5th District, despite low name recognition.

Richard Wright in the 4th has Bush-DeLay front man Doc Hastings for an opponent. It has been a major advantage for other Democrats to run against lock-step Republicans, since Bush is not polling well anywhere and the Democratic message is still vague in the voter's ear.

How is the economy doing in the race?

Ginning the till at election time is a campaign strategy perfected by Richard Nixon, and it has been a staple of national politics since (excepting Jimmy Carter), under the rubric "political business cycle." "It's the economy, stupid," was Bill Clinton's ubiquitous message to his staffers in the win over the first Bush. So what's up in the polls?
  • The Conference Board's Present Situation Index is still pretty high, near its highs of 2001, before the first Bush recession. Expectations are weak, however. The Board's Expectation Index is back below 90.
  • The Economic Optimism Index from Investors Business Daily and the Christian Science Monitor is sniffing its five-year lows, along with the same poll's Presidential Leadership Index and National Outlook Index.
  • A good Democratic campaign agenda could be got from the list of American's chief concerns at Public Agenda.
We may do well to inoculate the campaign against the "October Surprise" by emphasizing the blatant ineffectiveness and sleaziness on the domestic anti-terrorist front. Then if the Terrorism comes into play for some reason, it will be a wild card.

There's no doubt, the opportunity is here for Democrats, and the fight will be a lot easier if we keep them on the run.

Friday, August 4, 2006

Minimum Wage Vote, Jay Inslee and the Sales Tax Red Herring

It was good to see the number and unanimity of support for Senator Cantwell's post and her vote on the minimum wage. (The exception among the comments was a red herring thrown in on the sales tax deduction; more about that below.)

Kudos also to Jay Inslee who was all over this minimum wage bill. He used his two minutes on the House floor to hammer the key point right through the heart of the Republican sponsor and then to call him out. It is Inslee's attitude of suppressed outrage that endears him to me. Many of us feel it, but Inslee expresses it so very well. This Republican operation is sleaze and corruption, hypocrisy and dishonesty. Inslee is going to be a good and effective progressive leader for a long time to come. We need a couple three more.

Inslee's key point, of course, was that the tips issue, the effective cut in the wages of hundreds of thousands of workers in states like Washington, was a poison pill that doomed the bill from the start. The call-out was a direct challenge. He pointed out the Republican co-sponsor in an I yield my time so you can come down and tell me why this is okay (not a direct quote) type challenge. The poor fellow tried to make a brave front, but the game was up. He was reduced to: "Has the Congressman heard of these four letters -- E-I-T-C?" Then debate was cut. How lame is that? To use the Earned Income Tax Credit, a Democratic initiative from the 1990s, to say matters would somehow come out okay.

Sales tax red herring

In the comments section below the Senator's post, somebody who didn't know what he was talking about faulted Cantwell for the loss of the sales tax deduction. This will not happen. As we posted in May, Republicans used the budget rules to extend tax cuts for the rich beyond 2008, the capital gains and dividends reductions, rather than take care of elementary fairness in the sales tax deduction. Republicans realize the popularity of the sales tax deduction, and its inevitability, and want to play that tune closer to election time. Remember, Florida and Texas are also states with sales taxes and no income tax.

But even more to the point, Where was this deduction before Maria Cantwell? It wasn't.

Thursday, August 3, 2006

Flameout at the Tax Force

Thursday in the neighborhood we are going to open again the doors of Tacoma's tax reform panel, the City Services Tax Task Force, which yesterday looked into alternatives to the city manager's city services tax and didn't like what they saw. Voting 7-2 against the only alternative that would raise as much revenue, the task force has apparently decided on the original plan, or maybe no plan.

Your obedient correspondent authored a scheme which would have created no new taxes, while at the same time generating the needed revenue and allowing small businesses a $600,000 standard deduction on the B&O, not to mention giving ice cream to every child on the 4th of July. What's not to like. Taxes were nudged up, down and sideways. Up a bit on the largest firms, down for a penny on retail of food and drugs, and sideways to the so-called nonprofit hospitals. Zero effect on the property tax. It was kind of a sculpture in spam, considering the funky medium of taxes available to the city. But I don't mind telling you I was a bit miffed when it went down in flames.

Partly because it spoiled my sculpture and partly because it left the city manager's (he does have a name, Eric Anderson, a wonderful, dedicated, thick-skinned fellow) original plan as the only alternative to fill the gap on the table.

Apparently the devil is in the details, because the task force found a lot of devil in mine, and there is at this point very little detail on the city manager's plan. We can guess, though, that after it gets through our task force there will be no reference to nonprofits. And we know the property tax is the only funding source identified for police, fire and library. This means a 300-400 percent hike in the city's part of the property tax, at least $1,200 more per year on a $200,000 house and a minimum bump of $50 in my monthly rent.

I will guess that, even though we offer them up to one cent on the sales tax and the mysterious B&O tax goes away, voters will not embrace the mporting of the burden into the property tax.

Some time ago I suspended blogging here from respect for the deliberations of the group. Though the readership may be slightly smaller than the Western World, it seemed to cause some concern. I return to it today in search of revenue. I'm not convinced we've understood the need for new revenue after the Eyman initiatives. The revenue architecture is just not sturdy enough for the load ahead. Anderson bought two years with a workforce reduction and reorganization that cut close to, but did not hit the bone. Beyond the second year, it's not pretty.

Mind you, if the property-based scheme gets to the ballot, I'll vote for it. No question. The city's ability to fulfill its mission, the primary services of police, fire, library, streets and roads is in doubt without new revenue. And maybe I'm being premature. I admit that constricting the tax base by a wholesale shift to property taxes is something natural sensibilities, or maybe my economics training, allows me to witness only with a physical queasiness.

Yes, the TF has other revenue plans on the table, but none that come close to filling the gap. One is to take advantage of the legal window now open to raise the property tax to the 106% limit. Another is a form of occupancy tax. There are three related to roads funding. Then there is the grand plan for the B&O borrowed from the Gates Commission of 2002. After all, every city in Washington is up against the same problem.

But as a practical matter ...

Tuesday, August 1, 2006

Prediction Tuesday - Construction Employment

Last Prediction Tuesday we decided it was a Midas touch of the Governor that was keeping the fire lit under the economy, and continuing the string of plus-side corrections to revenue numbers. I didn't mention it at the time, but in looking through the June forecast for reasons weakness hasn't shown up yet, one thing really bugged me. It is illustrated in the following chart.

It is not so much that the lines of the future look improbably pacific compared to the radical agitation of the past. This is a function of using actual observations to inform the past and projections based on macroeconomic movement (i.e., ignorance) to inform the future. And it is not the seeming contradiction in the lines, where sometimes employment goes up as the other two go down, or vice versa. This has to do with the lag between permit and construction.

What troubled me was that the change in employment somehow stays above the changes in the projected permit activity. The difference may look tiny on the chart, but the green line stays higher. Construction firms don't have you on the payroll unless you're working. What gives? If anything, it should be lower.

I asked my friend (... I like him, he tolerates me ...) in construction trades. [Now this gets interesting, so follow along to the end.]

Commercial construction, says he.

I said, of course, "What commercial construction?"

The Olympics is drawing construction labor from north of Seattle. Snohomish County has broken ground on a $4.1 billion sewage treatment plant. Sound Transit is all over the light rail in Seattle, and that's going to go on for awhile. DOT projects, including the second Tacoma Narrows bridge, are going full steam, and Olympia and the Port of Tacoma have just signed off on a study of a rail coordination facility in the South Sound.

Public works! That's what commercial construction! The Keynesian in me loves it.

That is very interesting, but here is the really good part:

Skilled construction work is in demand and will be in demand over the next half dozen years. The kind of work that is done on these complex, long-term projects. If you need a career and don't mind union benefits, union wage scales, being reliable and being motivated, get hold of one of the union apprenticeship programs. This is not $8 per hour framing that is over at the end of the season. It is skilled work, and it is not particularly seasonal, and there are openings. The union programs are the best, says my friend, and biggest.

Unskilled or semi-skilled workers are going to be looking around for other jobs after residential building tapers off, and it likely mean significant dislocation and stress for some of us, both newcomers and others. But skilled workers are at a premium. Some projects go unstarted because there aren't enough skilled workers for the top layer to graduate into site supervision. That is, the tools are needed, so upward mobility is retarded.

So, clink! To public works! Good employment. Better infrastructure for everybody. And support under demand for local businesses. Your tax dollars at work. Clink!

NOTE: Anyone who wants to explore apprenticeship opportunities in Washington should start at the Labor & Industries website www.lni.wa.gov that shows a full listing of the programs and application procedures.