Archive for February, 2013

When Republicans took control of the Minnesota legislature, Minnesota had a $6,000,000,000 deficit. Thanks in large part to GOP reforms, Minnesota was able to erase that deficit without raising taxes. This morning, the final budget forecast was released. Here’s what it said:

For the coming fiscal cycle, which begins in July and lasts through 2015, the state’s deficit will be $627 million. Both are improvements over estimates from late last year. In November, economists predicted the state would have to grapple with a $1.1 billion deficit over the next two years.

That’s the headline information. Here’s the important information found further down in the article:

it also shows slight dips in projected spending, with the biggest savings coming from health and human services spending. “Savings from negotiated reductions in managed care rates for elderly and disabled basic care, adults without children, and families with children, as well as an increase in pharmacy rebates in (fiscal year) 2014-15 contributed to the reductions,” it says.

That’s another way of saying that the reforms authored by former Rep. Steve Gottwalt saved Minnesota taxpayers a significant chunk of money. The question no longer is whether Republican reforms worked. The question now shifts to being whether Gov. Dayton and the DFL legislature will significantly depart from the GOP budget blueprint. Based on Gov. Dayton’s budget and the bills getting committee hearings thus far, the answer to that question is apparently yes.

If passed as is, Gov. Dayton’s tax increase proposals will significantly hurt economic growth:

Dayton has proposed the most extensive rewriting of the state’s tax code in a generation. It would increase state taxes by $2.1 billion over the next two years, with top earners and businesses paying the brunt of the costs.

His budget would increase state spending from $35.2 billion in the current two-year cycle to $37.8 billion in the 2014-15 biennium. That’s a 7.6 percent increase.

The governor has said the state needs the extra money to erase a budget deficit, provide more money for education and property tax relief and stabilize future state budgets.

The biggest change he called for would broaden the sales tax base to include haircuts, car repairs, expensive clothes and, stirring the most controversy, business-to-business services, such as advertising, accounting and legal work that are not taxed now. In exchange, he would lower the sales tax rate from 6.875 percent to 5.5 percent.

Missing from that final paragraph is the fact that smaller cities, especially those that don’t get LGA, will get hit hardest by Gov. Dayton’s sales tax increase. Cities like Sauk Rapids and Sartell have attorneys from local law first on retainer, not on staff. The Dayton/Lenczewski/DFL tax increase bill, in its current form, would devastate smaller cities like Sauk Rapids, Sartell, Foley, St. Joe and Cold Spring.

It’s time to tell DFL legislators representing DFL legislators that it isn’t ok to vote for higher property taxes for small cities in rural Minnesota.

Tagsmaller Minnesota cities that they’ll lose their jobs if they vote for this sales tax increase. It’s time to tell these s: , , , , , , , , , , , , ,

If there’s anything that this administration is good at, it’s threatening people. This time, they threatened Watergate investigative reporter Bob Woodward, saying that he’ll regret his statements criticizing President Obama for suggesting sequestration.

Ed Morrissey notes that Woodward isn’t the only person that this administration has threatened:

Lanny Davis, formerly a special counsel to President Bill Clinton, told WMAL’s Brian Wilson and Larry O’Connor that a White House official once threatened to have The Washington Times’ White House credentials revoked over columns Davis had written.

Davis says his editor “received a phone call from a senior Obama White House official who didn’t like some of my columns, even though I’m a supporter of Obama. I couldn’t imagine why this call was made.”

Here’s the story on the Woodward threat:

Bob Woodward said this evening on CNN that a “very senior person” at the White House warned him in an email that he would “regret doing this,” the same day he has continued to slam President Barack Obama over the looming forced cuts known as the sequester.

CNN host Wolf Blitzer said that the network invited a White House official to debate Woodward on-air, but the White House declined.

“It makes me very uncomfortable to have the White House telling reporters, ‘You’re going to regret doing something that you believe in,'” Woodward said. “I think they’re confused,” Woodward said of the White House’s pushback on his reporting.

The White House aide who Woodward said threatened him was Gene Sperling, the director of the White House Economic Council, BuzzFeed’s Ben Smith reported.

Any administration that’s repeatedly used the term “you’ll regret this” isn’t just pushing back. They’re attempting to intimidate those people. In this instance, that’s stupid because the public won’t buy the thought that Bob Woodward and Lanny Davis have suddenly become right wing shills.

This administration is known for its Chicago thug tactics towards the media. Anita Dunn famously attacked Fox News. Here’s part of that attack from October, 2009:

Calling Fox News “a wing of the Republican Party,” the Obama administration on Sunday escalated its war of words against the channel, even as observers questioned the wisdom of a White House war on a news organization.

“What I think is fair to say about Fox, and certainly it’s the way we view it, is that it really is more a wing of the Republican Party,” said Anita Dunn, White House communications director, on CNN. “They take their talking points, put them on the air; take their opposition research, put them on the air. And that’s fine. But let’s not pretend they’re a news network the way CNN is.”

Fox News senior vice president Michael Clemente, who likens the channel to a newspaper with separate sections on straight news and commentary, suggested White House officials were intentionally conflating opinion show hosts like Glenn Beck with news reporters like Major Garrett.

“It’s astounding the White House cannot distinguish between news and opinion programming,” Clemente said. “It seems self-serving on their part.

This wasn’t a one-time thing. Anita Dunn, Robert Gibbs and David Axelrod all criticized Fox News. Axelrod, Dunn and Gibbs each said that Fox News didn’t do real reporting. Now they’re telling Bob Woodward that he’ll regret his statements on sequestrion. Now they’re threatening to pull the Washington Times’ White House press credentials because Lanny Davis, the special counsel to Bill Clinton, wrote something that upset the administration.

That’s what Chicago thug tactics look like. In fact, that’s taking a page out of Saul Alinsky’s Rules for Radicals.

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This Politico article says that Chris Christie hurt his chances at becoming the GOP presidential nominee in 2016 because he’s expanding Medicaid. That’s being charitable.

New Jersey Republican Gov. Chris Christie’s reversal on accepting the Obamacare Medicaid expansion was a political no-brainer for a politician running for re-election in a blue state this year.

But the move has uncertain implications for Christie as a potential 2016 contender who is already taking darts from some conservatives over his bona fides.

Actually, this is exceptionally straightforward. Gov. Christie won’t be the GOP presidential nominee. Ever. The GOP rank-and-file, like the nation, despises the Affordable Care Act. Expanding Medicaid won’t make health care more affordable. It’s making health care more expensive. While there’s little doubt that Gov. Christie will cruise to re-election as governor of New Jersey, there’s no doubt that his thumbing his nose, again, at the GOP base on one of its core values has essentially ended his presidential aspirations.

Dandy Don Meredith put it best:

This morning, testimony was taken on Rep. Ryan Winkler’s minimum wage legislation. This testimony was given to a “joint meeting of the House Labor, Workplace and Regulated Industries Committee, and the Select Committee on Living Wage Jobs.”

The first testifier was Jennifer Schaubauch of the Minnesota chapter of the AFL-CIO. What she said was a stunning indictment of Obamanomics. She said that many higher paying jobs had been eliminated and replaced by minimum wage jobs. Ms. Schaubauch said that fact justified the need to raise the minimum wage to $10.55 per hour. Ms. Schaubauch insisted that raising the minimum wage was the only way to lift families out of poverty.

Another testifier in the first set of testifiers identified herself as a college graduate who’s been working the same minimum wage job for the last 3 years since graduating. That’s another testimonial to the fact that Obamanomics has failed. We didn’t hear stories like this during the Bush years, the Clinton years or the Reagan years.

That’s because incomes grew during their administrations. That’s the opposite of what’s happened during President Obama’s administration. During President Obama’s administration, median household incomes have dropped from $55,000 a year to less than $50,000 a year.

If the DFL cared about poor people, they’d stop enacting policies that’ve caused entrepreneurs to stop creating jobs. Yesterday, I wrote that Rep. Keith Ellison appeared on Hannity’s show last night to push for a third tax hike in 2 months.

During this morning’s testimony, Paul Rademacher testified, identifying himself as a small businessman. Mr. Rademacher listed the obstacles that the Obama administration has created and that the Dayton administration, coupled with the DFL legislature, are attempting to create. Here’s a partial list of what Mr. Rademacher said: fed income tax increased from 35% to 39.6%, fed capital gains tax increasing from 15% to 20%, Minnesota’s top income tax bracket increasing from 7.85% to 9.85%, a 71% increase in the state minimum wage and a major sales tax increase. Then Mr. Rademacher stunned people, saying that the average profit margin for grocery stores is 1%. The room fell silent when he said that, if these things became reality, it was possible he’d have to shut 2 of his grocery stores.

It’s rather apparent that President Obama’s policies have crippled the US economy. The AFL-CIO testifier, Ms. Schaubauch, testified to the fact that great paying jobs were eliminated while minimum wage jobs were created. Rep. Ellison pushed for President Obama’s alternative to the sequester, which is a third tax increase in 2 months. (Why do President Obama and Rep. Ellison hate economic growth this much?)

Gov. Dayton has proposed raising income tax rates while subjecting more people to a higher sales tax bill. The DFL legislature is in the process of forcing entrepreneurs to choose between laying people off, leaving the state or raising prices. Why does Gov. Dayton hate economic growth? Why is he intent on saddling cities and counties with crippling sales tax bills? Why is the DFL legislature intent on saddling businesses with massive labor cost increases while the economy is struggling?

Either the DFL doesn’t have a clue about economic growth or they’ve put a higher priority on passing everything on their special interest allies’ wish list than on growing Minnesota’s economy.

Either way, that’s terrible news for Minnesotans.

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8:25 — AFL-CIO’s Jennifer Schaubauch testifying that Obamanomics failed, with high wage jobs declining, low wage jobs increasing.
8:29 — “Now is the time to raise the minimum wage to $10.55 an hour.”
8:31 — Next testifier talking about how awful Obamanomics is. She’s talking about how she’s been forced to stay in a low-wage job for 3 years after graduating from college.
8:37 — Andrea Kieffer is rock star. She’s asking Ms. Schaubauch if it’s the state’s responsibility to solve a business’s turnover problems.
8:45 — Benjamin Gerber of Minnesota Chamber of Commerce testifying: “60% of people living below the poverty line are unemployed. Raising the minimum wage won’t help people who are unemployed.” Later, Mr. Gerber noted that Minnesota’s teen unemployment rate is higher than “South Dakota, North Dakota and Iowa.”
NOTE: Testimony from Mr. Rademacher listed the Democrats’/DFL’s attacks. Fed tax rate went from 35% to 39.6%, state tax rate proposed from $7.85% to 9.85%. Now Rep. Winkler is proposing a 71% increase in minimum wage.
9:20 — Rep. Simonson, who replaced child molester Rep. Gauthier, is getting upset. He’s getting defensive, too, saying that it isn’t just kids getting paid minimum wage.
9:25 — Paul Rademacher, grocery store owner, responds to Rep. Simonson, saying that raising the minimum wage won’t increase people’s purchasing power because product prices will increase, too.

Rep. Ellison got feisty when Sean Hannity confronted him about President Obama insisting on the sequestration cuts or tax hikes. Watch Rep. Ellison’s faux outrage in this video:

Here’s the key part of Rep. Ellison’s faux diatribe:

For you to say that the President is to blame is ridiculous. I was there in August, 2011 when the Republicans, your party which you shamelessly (CROSSTALK) What the President said is absolutely true. The people should ignore everything you said.

After Rep. Ellison attempted to filibuster Hannity, Hannity finally got a word in edgewise. Here’s what Hannity said:

First, it was Max Baucus and Bob Woodward who said that sequestration was President Obama’s idea.

This video verifies Hannity’s statement:

There’s something important that isn’t being discussed by the major media outlets, namely that President Obama and Rep. Ellison are fighting for the third tax hike in 2 months. The tax increases that were part of the Affordable Care Act took effect on Jan. 1, 2013. President Obama’s tax hike on small businesses took effect less than a week later. Rep. Ellison enthusiastically voted for both of those tax hikes.

In fact, Rep. Ellison has never voted against raising taxes, either when he served in the Minnesota legislature or in the US House of Representatives. Likewise, President Obama has never voted against raising taxes, either as part of the Illinois Senate or the US Senate.

The question that the media hasn’t asked of Rep. Ellison is simple: Rep. Ellison, why do you hate the US economy this much?

It’s one thing to fight for a tax increase. It’s another thing to fight for progressive tax increase days after a regressive tax hike goes into effect. It’s totally irresponsible to fight for regressive tax increases, then fighting for raising progressive tax rates, then insisting on “closing loopholes” without cutting tax rates.

That isn’t proof of economic illiteracy on Rep. Ellison’s part. It’s proof of Rep. Ellison’s economic stupidity or economic dishonesty.

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If I gave people the responsibility to put together a blueprint that’d Minnesota’s economy, it’d be difficult to do that quicker than the DFL, under the ‘leadership’ of Gov. Dayton and Rep. Ryan Winkler.

Between Gov. Dayton’s sales tax increase, which hits cities and the middle class hardest, Gov. Dayton’s income tax increase, which won’t hit ‘evil corporations’ but will hit small businesses and Rep. Winkler’s increase in the minimum wage, the DFL is quickly putting together a blueprint that’ll raise property taxes, incentivize entrepreneurs to leave the state and cause unemployment among young people to spike. Rep. Winkler’s delete-all amendment to HF0092, is particularly stunning. Here’s the language that’s particularly stunning:

1.14 (b) Except as otherwise provided in sections 177.21 to 177.35, every large employer
1.15 must pay each employee wages at a rate of at least $5.15 an hour beginning September
1.16 1, 1997, and at a rate of at least $6.15 an hour beginning August 1, 2005. Every small
1.17 employer must pay each employee at a rate of at least $4.90 an hour beginning January 1,
1.18 1998, and at a rate of at least $5.25 an hour beginning August 1, 2005:

1.19 (1) every large employer must pay each employee wages at a rate of at least:
1.20 (i) $8.35 per hour beginning August 1, 2013;
1.21 (ii) $9.45 per hour beginning August 1, 2014;
1.22 (iii) $10.55 per hour beginning August 1, 2015; and
1.23 (iv) the rate established under paragraph (d) beginning January 1, 2016; and
1.24 (2) every small employer must pay each employee at a rate of at least:
1.25 (i) $6.50 per hour beginning August 1, 2013;
1.26 (ii) $7.75 per hour beginning August 1, 2014;
1.27 (iii) $9.00 per hour beginning August 1, 2015; and
2.1 (iv) the rate established under paragraph (d) beginning January 1, 2016.
2.2 (c) Notwithstanding paragraph (b), during the first 90 consecutive days of

2.3 employment, an employer may pay an employee under the age of 20 years a wage of $4.90
2.4 an hour. No employer may take any action to displace any employee, including a partial
2.5 displacement through a reduction in hours, wages, or employment benefits, in order to hire
2.6 an employee at the wage authorized in this paragraph
at least:
2.7 (1) $6.07 per hour beginning August 1, 2013;
2.8 (2) $7.24 per hour beginning August 1, 2014;
2.9 (3) $8.41 per hour beginning August 1, 2015; and
2.10 (4) the rate established under paragraph (d) beginning January 1, 2016.
2.11 No employer may take any action to displace an employee, including a partial
2.12 displacement through a reduction in hours, wages, or employment benefits, in order to
2.13 hire an employee at the wage authorized in this paragraph.

It’s one thing to debate the merits of the minimum wage. It’s quite another to include in the minimum wage bill language that tells entrepreneurs that they can’t cut employees’ hours or benefits while dramatically increasing the employees’ wages.

If Rep. Winkler’s amendment isn’t gutted, these rules would go into effect on August 1, 2013. The spike in youth unemployment will start just prior to that. That’s because the hospitality industry will get hit hardest by Rep. Winkler’s legislation. HINT: The DFL isn’t the friend of young people.

Officials from Plymouth and other cities have testified that the additional expenses they’ll incur will almost zero out the LGA increase. That’s if they’re getting LGA. If they aren’t, these smaller cities will get hit exceptionally hard by Gov. Dayton’s sales tax increase.

This isn’t the blueprint for prosperity and job creation. It’s the blueprint for stagnation, higher property taxes and artificially high project costs.

UPDATE: Check out Mitch’s post about Rep. Winkler’s Brezhnev-style economic theories.

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The first thought that leaps to mind when I read this article is that Silicon Energy’s business model isn’t built on anything solid:

Silicon Energy, a Washington-based solar panel company, missed its first two loan payments.

So, the Iron Range Resources and Rehabilitation Board (IRRB) restructured the deal and the new payments do not start until October 2013.

Silicon Energy opened its solar panel manufacturing plant in 2011 just outside Virginia, Minn. on the Iron Range.

The company received a $1.5 million loan from the IRRB and the IRRB also gave the Mountain Iron Economic Development Authority $3.6 million to loan Silicon Energy to help build its new plant.

Silicon Energy also owes an initial payment of $75,000 on the $3.6 million loan in October as well.

The head of the IRRB says the company’s business model had to be redone after the tsunami in Japan hurt the company’s timeline for opening up and selling its solar panels.

IRRB Commissioner, Tony Sertich, also says the company did not get into a rebate program offered by Xcel Energy, but should be able to get into that program soon, which should help Silicon Energy sell more solar panels to homeowners and businesses.

First, the Iron Range Resources and Rehabilitation Board is the IRRRB, not the IRRB. Second, the plethora of excuses for Silicon Energy’s failure to make its payments are rationalizations. They aren’t legitimate excuses. Blaming Silicon Energy’s failuter to make their payments on the Japanese tsunami sounds wimpy (Think President Obama blaming the economy’s poor performance on ATMs). Third, a company that needs subsidies, aka rebates, to make a profit isn’t a legitimate business model.

Most importantly, the reality is that the IRRRB’s existence is tied to their dispensing massive amounts of pork to hide the DFL’s unwillingness to let the Iron Range develop a real economy based on mining rather than scraps of pork from the IRRRB.

That isn’t the way to build a real economy. The way to build a healthy, prospering economy is by letting companies create things of value. Do thoughtful people think that a company that fails without massive government subsidies adds anything of value to the Iron Range economy? If it isn’t adding anything to the Iron Range economy, it isn’t adding anything to Minnesota’s economy.

The DFL keeps insisting that solar and wind power are the future. Where’s their proof of that? The only thing on the record thus far are their allegations that wind and solar are the future. That’s anything but proof that they’re the future.

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Last week, House Higher Ed Committee Chairman Gene Pelowski challenged MnSCU Vice-Chancellor Laura King:

Led by Winona Rep. Gene Pelowski, the pugnacious House point man on higher education, lawmakers grilled MnSCU chancellor Steven Rosenstone and other MnSCU administrators during a Wednesday hearing.

The resounding message from legislators: Rising tuition costs in MnSCU, the statewide system that includes St. Cloud State University and St. Cloud Technical & Community College, have become a real concern in the past decade.

Wednesday’s hearing was contentious at times. At one point, Pelowski, responding to MnSCU vice chancellor Laura King’s assertion that students were consulted on tuition hikes, flatly told King: “I don’t believe what you just said.”

Chairman Pelowski is justified in questioning Vice Chancellor King. When President Potter eliminated SCSU’s Aviation Department, he was required to follow MnSCU procedure 3.36.1, which requires documenting 9 specific things. He didn’t. Shortly thereafter, Larry Litecky, then the Interim Vice Chancellor for Academic and Student Affairs, was asked to respond to why that MnSCU procedure hadn’t been followed. Here’s Mr. Litecky’s response:

My staff and I remain persuaded that the university conducted required and appropriate consultations and assessments that informed its decisions.

Students in the Aviation program weren’t consulted as required. Further, SCSU didn’t provide the documentation that’s required. That means there’s nothing to be persuaded about. Either President Potter documented the things that MnSCU policy requires or he didn’t.

It’s questionable whether the procedure was followed or if the documentation exists.

That means Chairman Pelowski is totally justified in questioning whether MnSCU consulted with students about a tuition increase.

This paragraph caught my attention:

MnSCU officials say state funding cuts during the past decade have forced the system, governed by its board of trustees, to boost tuition to maintain quality of instruction.

MnSCU raised tuitions but didn’t think about shutting down some of its campuses. Why didn’t they think of that? Further, MnSCU and their universities didn’t stop hiring administrators. Shouldn’t that part of MnSCU have been the first part of MnSCU to get examined? There are more administrators in MnSCU and at each MnSCU university now than there were 5 years ago. More importantly, administrators are getting paid more now than 5 years ago.

Pelowski and Poppe questioned the salary and bonus levels for MnSCU administrators, which Pelowski said are coming as students shoulder ever-greater tuition costs. In an example typical of his administrative colleagues, St. Cloud State University President Earl H. Potter III got a $288,550 salary plus a $14,250 bonus in 2012. “The issue is, someone’s bearing the burden for all of this,” Pelowski said. “There has to be a reckoning.”

Pelowski said Gov. Mark Dayton, in a recent meeting between the two, highlighted that many MnSCU administrators make larger salaries than the governor. Dayton’s deputy chief of staff, Bob Hume, confirmed that account and said the number of administrators and administrative salaries are issues of concern for Dayton in both the MnSCU and University of Minnesota systems. “It’s a big chunk of resources we need to make sure we’re applying as strategically as possible,” Hume said.

Why raise tuition when MnSCU should be cutting administrators and administrator salaries? That’s a backwards approach. Administrators cost universities money. Hiring faculty to staff more job-creating programs increases enrollments, which increases revenues.

The question that still remains is whether the DFL legislature will force MnSCU to make smarter financial decisions. Only time will tell on that.

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In less than a week, the federal government will start cutting defense spending across the board rather than setting intelligent priorities.

Sequestration is the Obama administration’s faux solution to the Obama administration’s reckless spending. Cutting the Pentagon’s budget is a major part of sequestration. Senate Democrats have helped paint the administration into this corner.

On top of the $500 billion Defense Department that’s already been cut, sequestration would cut another $500 billion from the Pentagon’s budget. The F-35 program offers the perfect illustration of the foolishness of sequestration. Under sequestration, the Defense Department budget would be automatically cut across the board by 10% every year for 10 years. That’s on top of the $487 billion that’s already been cut from the Defense Department budget.

If the full sequestration were to take effect, “we’re going to have to look completely at the [F-35] programme,” US Air Force chief of staff Gen Mark Welsh told the Senate Armed Services Committee on February 12. “It’s going to be impossible to modernize.” Under sequestration, it’s likely that our young pilots will fly fighters older than they are while our potential enemies continued to build their 5th generation capabilities.

The bottom line is simple. Sequestration will hurt the military. If sequestration is implemented, the US Air Force will be more vulnerable than it should be.

Sen. Franken and Sen. Klobuchar have been invisible in this fight. Similarly, the US Senate has been completely absent in the budget debate. Real people are about to get hurt by these indiscriminate cuts. True American patriots will needlessly be put in harms way if these are fully implemented.

Cutting the F-35 program would cost Minnesota high paying jobs at a time when creating high paying jobs should be Sen. Franken’s and Sen. Klobuchar’s highest priority. Minnesota suppliers would be directly affected. Suppliers aren’t the only Minnesota companies that would be affected, either.

It’s important that people remember that these cuts come on top of other cuts to the military. Those cuts affect both jobs and the military’s ability to protect our nation.

It’s time for Sen. Franken and Sen. Klobuchar to fight for Minnesota jobs. It’s time for Sen. Franken and Sen. Klobuchar to demand the Senate do its job and put together budget cuts that don’t kill Minnesota jobs or weaken military readiness. It’s time that Sen. Franken and Sen. Klobuchar actually made decisions based on doing what’s right for America.

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