Here & Now

Here & Now for Dec. 1, 2017

Frederica Freyberg:

I’m Frederica Freyberg. Tonight on “Here and Now,” a first look at the U.S. Senate tax plan. In our look ahead, we’ll talk about an anti-violence project taking shape in Milwaukee with Mayor Tom Barrett. WPR’s Shawn Johnson is here with capitol insight on a legal power play between the governor and the superintendent of public instruction. We’ll go to Ashland to learn about prospects for a new life for an old Wisconsin resort, Telemark. It’s “Here and Now” for December 1st.

Announcer:

Funding for “Here and Now” is provided, in part, by Friends of Wisconsin Public Television.

Frederica Freyberg:

A first look tonight at the Republican U.S. Senate tax plan and where it goes from here. Wisconsin Senator Ron Johnson is now onboard after getting an additional break for business. But the latest analysis of the plan by Congress’s Joint Committee on Taxation shows the Senate GOP plan would add $1 trillion to the deficit over ten years. Still, the bill is hurdling toward passage with Johnson’s imprimatur. We’re joined tonight by a tax expert and professor in the UW-Madison La Follette School of Public Affairs. Rourke O'Brien also served as senior policy adviser at the U.S. Treasury Department. So thanks very much for being here to talk about this.

Rourke O'Brien:

Thanks for having me.

Frederica Freyberg:

So the tax plan is somewhat overshadowed today by other major breaking news out of Washington, but what do you think of that new scoring of which we just spoke with its trillion dollar deficit? What does that do to this bill for the politics of it?

Rourke O'Brien:

Sure, when we started this whole process, Paul Ryan and Mitch McConnell were both promising to go after a tax reform package that was deficit neutral. And then the goalposts changed and they said they’re willing to accept up one and a half trillion dollars of on budget deficit increases with the promise that the economic growth that would follow from the tax reform package would actually offset all of those costs. That it would be actually revenue neutral at the end of the day. But this is the first score that we’ve seen that’s allowed for this kind of dynamic scoring. This idea that we’ll kind of count the potential feedback mechanism through which the tax cuts might lead to more growth which might offset some of the costs of the bill, but it looks like that’s only going to reduce the price tag by a little bit. So we’re still going to have, even under the best case scenario, a trillion dollars added to the deficit.

Frederica Freyberg:

Now, the last time we spoke you envisioned that the House tax plan would require a lot of rewriting once the Senate was involved. What are the important changes that were made in your mind that are now teed up for this Senate vote?

Rourke O'Brien:

I think the big difference between the House bill and the Senate bill is the inclusion of the repeal of the individual mandate under the ACA. This was a provision that was added to the bill that will save the government some money because more people will no longer be insured and covered under the ACA. That means fewer subsidies through the marketplaces. That means lower cost to the government, which created more room for tax cuts in the Senate bill. Of course on the other side of that, we’re going to have potentially up to 13 million more Americans uninsured and premiums are expected to go up an additional 10% a year under this provision. So here we have–the House plan was just mainly looking at just taxes. Here we have a tax and health care bill all in one.

Frederica Freyberg:

A lot of people have been talking about the process. What do you think of it? Does it seem to have been hurried?

Rourke O'Brien:

It does. I mean these are really complicated bills. There are a lot of really smart experts all around the country who have models where they’re trying to understand the different implications of these various provisions. Here we have a vote that’s happening where we’re just now getting the latest numbers from JCT. And it still seems that that might not even be the final score as the bill seems to be changing out from underneath us.

Frederica Freyberg:

President Trump remarked this week, I heard him say it, that the tax plan would hurt him and other wealthy people. Could that possibly be true?

Rourke O'Brien:

It's hard to imagine how Trump personally won’t benefit from this bill. The estate tax reform alone is–it stands to benefit wealthy families, such as the Trumps. In addition, this provision to reduce taxes on pass-through corporations, of which many Trump organization companies are pass-through entities, that stands to benefit the president and other wealthy business owners.

Frederica Freyberg:

Now, our own Senator Ron Johnson, as you know, sought and received deeper business tax cuts to include so-called pass-through companies. He and others described these as kind of main street businesses. Is that fully accurate?

Rourke O'Brien:

Many small business are incorporated as pass-through entities. So many mom and pop shops are. It’s the idea that the company is so small, they only have a few owners and they rely on that business income as their personal income. So it’s a way to simplify the tax code so they don’t have to get taxed twice, once through corporate tax process, then through the individual income tax process. But the rules on how you can organize as a pass-through company are pretty loose. So you can have hedge fund managers and law firms and other kind of much wealthier entities incorporating as pass-through companies. By some estimates, 70% of all pass-through revenue goes to the top 1%. So this is ultimately going to be a big tax cut again for the wealthy.

Frederica Freyberg:

Going back to our previous interview, you said that whether corporate tax savings will be passed on to the average worker in higher wages or whether it will just be captured by shareholders through dividends is an important part of the story that remains to be told. When will that be able to be told?

Rourke O'Brien:

Yeah. It’s still an open question. How much can we expect these corporate tax cuts to be passed on to the worker? Even by the most generous estimate, we’d only expect, in some economic modeling, about 25% of those tax cuts to be passed on to the worker in the form of higher wages. But it’s important to remember that right now in most industries, corporate profits are at all-time highs and wages have stagnated. It’s hard to how we can expect this one-to-one transfer that we’ve been promised that these corporate tax cuts will be passed on to the worker.

Frederica Freyberg:

What is your reaction as a tax expert to the part of the plan that sunsets the individual tax cuts but keeps corporate tax cuts permanent?

Rourke O'Brien:

It creates quite a fiscal cliff for families. So in the next ten years, while some families in years one and two might receive a modest tax cut under this bill, those tax cuts sunset. By 2027, the majority of middle class families are going to actually see a tax increase. So the idea is that part of the bill will be so popular that five or ten years from now, there will be another bill that will vote to extend those provisions. But then that will only make the deficit picture worse. At some point, we have to figure out a tax bill that is permanent. A tax reform that works for everyone and that ultimately will be paid for somehow.

Frederica Freyberg:

Speaking of being paid for, as part of the PAYGO sequester rules, would there have to be automatic cuts to programs like Medicare because of this tax bill?

Rourke O'Brien:

It does look likely that the tax bill as written would run afoul of PAYGO rules which would automatically trigger cuts to a number of programs including Medicare. In the past, the Congress has gone ahead and put in waivers and said that this specific piece of legislation won’t count against those rules. It looks like that’s what they’re going to do here but that’s going to be an important thing to watch.

Frederica Freyberg:

All right. Rourke O'Brien, thanks very much for your expertise.

Rourke O'Brien:

Thanks for having me.

Frederica Freyberg:

In tonight’s look ahead, the city of Milwaukee has released its ambitious nearly 100-page “Blueprint for Peace,” an awaited document to stem violence in the city. A city that saw a 76% increase in gun homicides between 2010 and 2016. The blueprint sets out six goals beginning with stop the shooting. The others: promote healing and restorative justice, support children and families, promote economic opportunity, foster safe and strong neighborhoods and strengthen the coordination of violence prevention efforts. The plan is being described as a public health approach. Milwaukee Mayor Tom Barrett joins us with details. Mayor, thanks very much for being here.

Tom Barrett:

It's great to be with you.

Frederica Freyberg:

Why a public health approach?

Tom Barrett:

Well, I think most people would be surprised to learn that in the city of Milwaukee, the budget for our police department, which this year is about $302 million, is actually larger than the entire tax levy for the city of Milwaukee. I’ll repeat that ’cause it’s shocking probably to most people around the state. The budget for the Milwaukee Police Department is larger than our entire property tax levy. So there’s no question that we’re putting the resources into law enforcement and doing what we can to apprehend criminals and to stop things from happening. But we’re also now convinced that we could add a gazillion police officers and we still wouldn’t get to some of the core issues that are leading to the violence in the city. Nationally and locally here as well, we’re seeing more and more people saying, look, let’s look at some other factors. Obviously, we’re going to have a lot of police but let’s treat this as a public health epidemic because there are factors that are leading, not just Milwaukee but a lot of urban areas throughout the nation, to have much higher counts of violence. So that’s something that we want to deal with here. So what we did is in 2015, the year when we saw a significant increase in homicides, we essentially retooled our Office of Violence Prevention, tripled it in size, and asked them to put together a community document. So this is not the mayor’s “Blueprint for Peace.” This is the city of Milwaukee community’s “Blueprint for Peace,” because I need the entire community to buy into this approach to see if we can reduce the violence we have in the city of Milwaukee.

Frederica Freyberg:

Now, this blueprint is all-encompassing. How can the city fix everything all at once?

Tom Barrett:

Well, we can’t fix everything all at once, but I think if we can bring the churches, if we can bring law enforcement, if we can bring community groups, if we can bring citizens, neighborhoods together and have a unified approach, where we’re dealing with a wide range of issues, I think we’re more likely to have a significant impact on the level of violence. Now, I say that, and I want you and your viewers to know our homicide rate for this year is down about 16% from last year. And it’s down about 22% from 2015. So I don’t want people to be afraid to come to Milwaukee. There’s an incredible renaissance going on in the heart of the city right now, unlike anything people have seen in their lifetimes. At the same time, we know that there are neighborhoods that are plagued by too much violence. That there are poverty issues, homeless issues, transient issues, education issues. So we want to deal with all these issues while we move the city forward. Because the city is moving forward.

Frederica Freyberg:

Now, one of the goals is coordination of efforts. We’ve learned that there are so many people and groups trying to help, but they compete for funding. How do you specifically bring them together?

Tom Barrett:

So our goal is to have our Office of Violence Prevention essentially be the center of the wheel. And all the spokes feed into that center so that we can better coordinate what’s happening in different neighborhoods. We want to literally map the neighborhoods and see what resources are in various neighborhoods serving youth, serving people coming out of prisons, serving people who need food. If we have a more coordinated approach to this, I think we’re going to be able to better utilize the assets we have and see where we need to put more resources. It’s an incredibly comprehensive approach. You’re right when you say that. The document itself is very comprehensive. But it’s focused on bringing everyone together. Not just law enforcement, not just the churches, but as many individuals and institutions as we can to supplement and complement the work that’s being done by law enforcement.

Frederica Freyberg:

Now, I noted interestingly that towards sustainable funding to help implement the goal, you’re thinking of a potential city fee or a tax? Describe that idea.

Tom Barrett:

Well, we’re still in the formative stages for that. Yesterday we made a presentation to the United Way. And we think that there might be community support from corporations and foundations. Because we’ve done it in a way that we focus on ten different neighborhoods. Ten different neighborhoods. It’s a citywide approach, but we know that the violence is most prevalent in ten different neighborhoods. And so we’re able to work with the foundation, work with the corporation to say, look, you want to help us? Here’s old Milwaukee. Here’s old Milwaukee neighborhood. Here’s Harambee. We could work with you to focus your dollars or your assets or your people in this specific area. So even though it’s a large document and a comprehensive document, it really can be broken up, depending upon the funding source and the different needs of those neighborhoods.

Frederica Freyberg:

Very briefly, with about a half a minute left, what is next?

Tom Barrett:

Well, what we’re doing right now is we’re having neighborhood sessions. Again, because a big part of this is to have the neighborhoods buy into this. It can’t just be the mayor’s plan. It can’t be just the city’s plan. It certainly can’t be just the police department’s plan. It has to be all of our plan. If I didn’t think we couldn’t move the needle, we wouldn’t be doing this. But I'm convinced we can deal with these issues because of the incredible progress we’ve seen in economic development in Milwaukee. It’s a different Milwaukee for people who haven’t been here. We’re really moving in the right direction. But we have to, again, bring everybody along with that.

Frederica Freyberg:

Mayor Tom Barrett, thanks very much.

Tom Barrett:

Thank you.

Frederica Freyberg:

A different look at crime and punishment now from the state capitol. Milwaukee State Representative Evan Goyke, a former public defender, introduced a slate of bills this week to put more inmates in treatment programs and reduce the rate of reincarceration.

Evan Goyke:

The goal here today was to really talk about what is happening behind the fence, in prisons, and the prison population. This is about avoiding a problem. We stand on the precipice of having to build a new prison or send guys out of state. These three bills are just the beginning. This is not my dream of how the criminal justice system should be reformed. This is just to avoid the crisis we find ourselves in today.

Frederica Freyberg:

In other state news, the race for governor in Wisconsin is already seeing a skirmish between the incumbent and a Democrat in the running. In tonight’s capitol insight, we look at how Governor Scott Walker won’t let Democratic Superintendent of Public Instruction Tony Evers have his own lawyer to represent him in a lawsuit over how he runs his agency. The governor wants the State Attorney General’s office to represent Evers, even though the justice lawyer would argue against Evers. Hmm. We are joined by WPR Capitol Bureau Chief Shawn Johnson to sort this out. That is kind of a hmm.

Shawn Johnson:

It is. There’s a lot of those in this case.

Frederica Freyberg:

But it is usual practice, as I understand it, for the State Department of Justice lawyers to represent agencies in lawsuits. So what’s different this time?

Shawn Johnson:

What’s different this time is that while the Department of Justice is willing and is currently slated to represent Tony Evers in this case, they think that the people suing him essentially are right. That is, they disagree with Tony Evers in this case. And so they would be giving him representation, but not the kind of representation he wants.

Frederica Freyberg:

Let me back up a little bit and say that Evers was sued by a right-wing law group over not getting the Walker Administration’s signoff on implementation of rules within the Department of Public Instruction. That’s a new requirement under state law. But does it make a difference in this case in terms of this legal representation and this signoff of these administrative rules that Tony Evers is a Constitutional officer?

Shawn Johnson:

Tony Evers would argue that it does. That his powers are spelled out explicitly in the state Constitution. And it’s not just him making that argument either. The State Supreme Court issued a decision in 2016 in a very similar case involving a new law that gave the governor more power to veto rules from the Department of Public Instruction. And in that 4-3 decision, they said that, yes, the Superintendent of Public Instruction has these powers and that the governor can’t restrict them.

Frederica Freyberg:

This is basically just a quagmire, but what is really happening here is that the justice lawyers would not argue Evers’ side of this case.

Shawn Johnson:

Right. That’s what it boils down to at this point. And that’s why you heard Tony Evers say this past week — he held a press conference where he had a message to his political opponents, Governor Walker and I think Tony Evers called them his hand-picked attorneys. He said you’re fired. And here’s what Tony Evers said about why.

Tony Evers:

The governor doesn’t get to choose his opponents on the ballot and his opponents’ lawyers in court. I can’t believe there’s many, if any, citizens in the state of Wisconsin that would feel comfortable going to court knowing that the attorney that’s representing them actually represents the other side.

Frederica Freyberg:

So who does Tony Evers want as his lawyer?

Shawn Johnson:

He wants his own lawyer, his lawyer within the Department of Public Instruction, to represent him. That’s actually what happened when this case — not this case, but the similar case went through, the one decided in 2016. Tony Evers had an attorney from the Department of Public Instruction represent him. He wants to do that again. The Department of Public Instruction was starting to initiate that process this time, when Governor Walker’s office stepped in and said, no, the Department of Justice, Brad Schimel's office, will represent you, Tony Evers.

Frederica Freyberg:

What else does the governor say on why he’s doing this?

Shawn Johnson:

The governor, when he was asked about the Tony Evers situation, he basically came back to this message of Tony Evers needs to follow the law. That was the message that you heard over and over again from Governor Walker. So he was asked specifically, shouldn’t Tony Evers have a lawyer representing him who represents his cause, who believes in his cause? Here’s what the governor had to say about that.

Scott Walker

You’re entitled to a lawyer that represents everyone then. The fact of the matter is that the Justice Department represents all state agencies. They’re not conflicted out. And so they’re ultimately going to represent the state in this case just like they would for any other state agency or any other office.

Frederica Freyberg:

Politically speaking, are both sides now, Tony Evers, who we’ve mentioned is a candidate, a Democratic candidate running for governor, of course incumbent Scott Walker who has announced that he’s running for reelection, are they both politicking on this now?

Shawn Johnson:

It would seem like it. We are less than a year from the next governor’s race. I think we should view everything that Tony Evers, a candidate for governor, and Scott Walker, a governor running for third term, we should view everything they do through a political light. So I think we’re on safe ground there. When this thing started out, you could argue that Wisconsin Institute for Law and Liberty, the group bringing this lawsuit, while it is consistent for them to want to restrict administrative rule-making power from agencies, they presented this as Tony Evers breaking the law, right? Knowing that he’s a candidate for governor. Tony Evers is hitting back now saying I'm standing up to Scott Walker. He’s fund-raising off of this pretty regularly saying that he’s in this fight with Scott Walker. So he’s using it to his advantage, too.

Frederica Freyberg:

Just super quickly, there’s a thing that just happened on this as well, another filing.

Shawn Johnson:

Yeah, essentially the lawyers who represented teachers who brought this case initially back in 2012 are asking that court to revisit it again and stop Scott Walker from enforcing this. So instead of dealing with it at the State Supreme Court, they want to take it back into the Circuit Court system.

Frederica Freyberg:

We’ll keep watching it. Shawn, thanks very much.

Shawn Johnson:

You're welcome.

Frederica Freyberg:

Southeast Wisconsin is getting Foxconn. Now an announcement about how northern Wisconsin could see a major redevelopment project. Granted, it’s on a much smaller scale, but it’s regionally important. The iconic Telemark Lodge Resort in Cable has seen more than its share of ups and downs over its 70-year history. From its start as a ski hill in 1947 to its heyday in the 1970s when big-name acts played its grand venues as the ski lodge expanded into a major resort and conference center. It sits adjacent to the starting gate for the international Birkebeiner cross-country ski race. But by the mid ’80s the resort’s original owner filed bankruptcy. And since then, the resort has been bought and sold several times, each time reopened only to be closed again, a rollercoaster of dashed promised for renovation and revitalization. So the question now is can the latest $47 million reno and expansion announced by new buyers stick this time? The developers are looking for taxpayer assistance, which needs action from the legislature and the governor. Cable area officials were in Madison this week trying to set that in motion, including Town of Cable Chairman Art Hancock. He joins us from Ashland and thanks very much for doing so.

Art Hancock:

I'm glad to do so.

Frederica Freyberg:

Well, so what are you and others seeking from the state?

Art Hancock:

What we’re seeking from the state is the permission to establish a tax increment district. We’re a small town and TIF legislation and TIF districts are usually only granted to villages and larger cities. Because we don’t meet the criteria with the existing legislation, we were down in Madison to try to get them to give us special legislation so that we can establish a district in our town.

Frederica Freyberg:

What's been the response in Madison?

Art Hancock:

I thought it went really quite positively yesterday. We met before the Ways and Means Committee for the Assembly and for the most part they were very positive. They did have some concerns that as a town they don’t want us to get in over our heads with financing it too much. But I think we allayed their fears and I feel like we’re on a positive track.

Frederica Freyberg:

Is there any kind of dollar figure as to how much the new buyers or the developers would like to see?

Art Hancock:

The Town of Cable has not entered into any negotiations with the developer at this time. There have been some numbers that have been thrown out, but they’re just kind of preliminary numbers. The resort is in such a dilapidated state right now that the amount of money that needs to go and that can go into TIF-allowed projects, it’s really kind of preliminary right now to determine that.

Frederica Freyberg:

Now, I spoke to one local in Cable who said that she is excited by the prospect of bringing Telemark back, but also scared to death. Does that pretty much measure how people there feel?

Art Hancock:

I thing that’s probably a pretty good estimate of what most folks in Cable feel. The sense I get is that most of us are cautiously optimistic. Telemark has been our flagship for years and years, and it’s been — we have folks in Cable who — couples that have met on the slopes of Telemark. And it was such an economic powerhouse for so many years. So the prospects of it opening again are huge, though we have over the last few years had a number of potential developers that have fallen through. I think people in Cable are a bit suspect but everybody that I've talked to anyway is very optimistic.

Frederica Freyberg:

So what do you envision as the best-case scenario for that property?

Art Hancock:

Well, the best case is we have a current developer that is interested in purchasing the property, has actually entered into a purchase agreement with the current owner of the property. They hope to close on the property at the end of January. That’s the first — would be the first big milestone. And then within the last next year or year and a half, for them to develop the property just along the same lines that they are hoping to — that they’ve projected that they are.

Frederica Freyberg:

What could it mean for the economy and jobs in the region?

Art Hancock:

We had a — the Town of Cable and Bayfield County funded a market feasibility study. And we — and part of that study, they looked at some of those numbers of what it might mean to the community. And they’re projecting that it might result in about a $25 million increase in direct visitor spending to Bayfield County. So a lot of that would come right into our town, and we would be very happy with those results.

Frederica Freyberg:

Why do you think, if you do, that this time might be the charm for Telemark?

Art Hancock:

Well, the current developer is — they’ve been around the block. They’ve done these projects before. The developers that have come through that tried to just kind of renovate the existing building that was built in the ’70s, that hasn’t worked out. But this developer wants to do a complete redevelopment of the property. And it’s a different thing. And I think their marketing plan is quite different as well. And I think that that will prove to be successful.

Frederica Freyberg:

All right. Well, we hope so. Art Hancock out of Ashland, thanks very much for joining us.

Art Hancock:

Thank you.

Frederica Freyberg:

Next week on “Here and Now,” we’ll hear from our colleagues at WisContext.org about the connection between Hurricane Maria recovery and a slow-down of some medical supplies in Wisconsin. That’s on next week’s program. That’s all for tonight. I’m Frederica Freyberg. Have a great weekend.

Announcer:

Funding for “Here and Now” is provided, in part, by Friends of Wisconsin Public Television.