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The Washington Post’s Dana Milbank is a “hit and miss” columnist who who frequently comes off as the worst kind of D.C. insider, but his latest column on the Trans-Pacific Partnership agreement and the plan to “fast track” approval, which is featured in the morning’s edition of Raleigh’s News & Observer, is on the money. The column rightfully blasts the Obama administration for plowing ahead with the agreement despite the myriad potential disasters it holds for American workers and consumers.

“[Elizabeth] Warren is right: The Trans-Pacific Partnership (TPP) is an abomination – not because of the deal itself, and not because free trade in general is a bad idea. The TPP is an abomination because Obama had a chance to protect American workers from the harm that would inevitably come from such a pact, and he didn’t take it, or at least he hasn’t.”

And for an even more comprehensive and damning take on the whole plan, check out the following two  posts from the good people at the Global Trade Watch section of the national nonprofit advocacy group, Public Citizen:

1. A detailed explanation of why “Fast Track” is a terrible way to approach this momentous agreement, and
2. “50 reasons we cannot afford the TPP” (which leads off by highlighting the situation in North Carolina):

North Carolina: North Carolina has lost more than 369,000 manufacturing jobs – nearly half – since NAFTA and NAFTA expansion pacts have taken effect.  More than 212,000 specific North Carolina jobs have been certified under just one narrow Department of Labor program as lost to offshoring or imports since NAFTA.

The bottom line: Free trade can be a good thing, but it needs to be fair trade too. Rushing into the TPP could be a real disaster — especially for states like North Carolina that have already lost so much.

NC Budget and Tax Center

I recently noted the differing approaches of President Obama and Congress regarding tax changes, developing a budget and supporting the economy. In particular, I noted Congress’ push to eliminate the federal estate tax – which applies to very large inheritances by a small group of wealthy heirs.

Over the years, the amount of inheritance that is exempt from the federal estate tax has increased exponentially while efforts to raise the minimum wage in line with the growing costs of meeting basic needs have stalled.

In 2001, the federal minimum wage was $5.15 an hour and remained at that level until 2008 when it was increased to $5.85 an hour and then to $7.25 in 2010, where it remains today. On this issue, North Carolina has not differed from federal law, with a state minimum wage of $7.25 as well.

By contrast, in 2001, the amount of estate inheritance that could be exempt from the federal estate tax was $625,000. By 2008, this exemption amount increased to $2 million and for 2015 the exemption amount is $5.43 million. In 2013, North Carolina state lawmakers completely eliminated the state’s estate tax (only 23 North Carolina taxpayers paid an estate tax for the 2012 tax year). In the same year state lawmakers eliminated the state Earned Income Tax Credit, which helped more than 900,000 low- and moderate-income taxpayers who earn low wages keep more of what they earn to offset an already regressive state tax system. Read More

NC Budget and Tax Center

The March employment numbers out today show another month of positive, but relatively lackluster economic performance in North Carolina. The unemployment rate in North Carolina has now been essentially flat for the last five months and the number of unemployed North Carolinians has actually increased in the first three months of 2015.

According to analysis of the latest labor market data by the Budget & Tax Center, employment levels have edged up in the last year, but are still well below the pre-recession norm. In fact, a smaller share of North Carolinians have a job today than during the worst of the recession that followed the 9/11 attacks.

“The North Carolina economy has been idling along for several months and continues to be weaker than it was in 2007,” said Patrick McHugh of the North Carolina Budget and Tax Center. “The worry now is that we’ll see a new normal, with lower levels of employment and paychecks that don’t go as far.”

Other highlights of the March data include:

  • Unemployment rate not making gains: After falling dramatically from 2009 through the third quarter of 2014, the state and national unemployment rates have flattened out in recent months. Even while the state continues to add jobs, growth is not enough to push unemployment below the 5% threshold that most economists see as the top-end of a healthy labor market. Part of the flattening out may be attributable to people coming back into the labor force, which would be good news. However, it is still troubling to see the labor market falling well short of full employment.
  • Still more North Carolinians out of work than before the Great Recession: Even though the ranks of the unemployed have declined over the past year, there are still more than a quarter-million North Carolinians looking for work, approximately 10% more than at the end of 2007.
  • Percent of North Carolinians employed still near historic lows: March numbers showed 57.5% of North Carolinians were employed, which is up 1 percentage point from March 2014. However, this still leaves North Carolina well below the level of employment that was commonplace before the Great Recession. In the mid-2000’s, employment levels were generally between 62% and 63%. Moreover, the level of employment in North Carolina has fallen behind the national average, when the state was generally at or above the nation in the pre-recession period.

For more context on the current state of the North Carolina economy, check out a recent report that reviews the last seven years of economic data and the Budget & Tax Center’s weekly Prosperity Watch platform.

 

NC Budget and Tax Center

Members of the Kansas Center for Economic Growth are visiting North Carolina this week to share what has happened in Kansas following massive tax cuts signed into law by Governor Brownback back in 2012. Kansas has become a case study of the grave consequences resulting from a dogged pursuit of tax cuts as an economic growth strategy. The results are not that good.

In 2012, Kansas enacted tax cuts that were considered among the largest ever enacted by any state. Tax cut proponents in other states – including North Carolina state lawmakers – held Kansas up as a model to be replicated. Accordingly, North Carolina state lawmakers followed Kansas’ path and passed huge income tax cuts in 2013 that largely benefited the wealthy and profitable corporations and significantly reduced available revenue for public investments.

For Kansas, the reality in the wake of the costly tax cuts has been nothing to write home about. Here are some low-lights of Kansas’ experience, accordingly to the Center on Budget and Policy Priorities.

  • Deep income tax cuts caused large revenue losses. Kansas’ tax cuts last year cost the state more than 10 percent of the revenue it uses to fund schools, health care, and other public services, a hit comparable to a mid-sized recession. The revenue loss is expected to rise to 16 percent in five years if the tax cuts are not reversed.
  • The tax cuts delivered lopsided benefits to the wealthy. Kansas’ tax cuts didn’t benefit everyone. Most of the benefits went to high-income households and taxes were even raised for low-income families to offset a portion of the revenue loss.
  • Kansas’ tax cuts haven’t boosted its economy. Since the tax cuts took effect at the beginning of 2013, Kansas has added jobs at a pace modestly slower than the country as a whole. Furthermore, the earnings and incomes of Kansans have performed slightly worse than the U.S. as a whole as well while the number of registered business grew more slowly in 2013 than in 2012.

Read More

Commentary, NC Budget and Tax Center, Raising the Bar 2015

Editor’s note: The following post by Jeremy Sprinkle, communications director at the NC State AFL-CIO, is the latest installment in “Raising the Bar” — a new series of essays and blog posts authored by North Carolina leaders highlighting ways in which North Carolina public investments are falling short and where and how they can be improved. 

No one wants North Carolina to have a strong economy more than its workers, who want to be able to work and to earn enough to support their families. Our state budget includes vital investments in supporting our current and future workforce, for example through workforce development, re-employment support and early childhood education, and our K-12 public school system. We know that making investments in these areas ultimately benefits all workers, families and our economy.

Unfortunately, legislative leadership in North Carolina has not pursued a path of investing in our workers and future workforce, but instead implemented a costly tax plan passed in 2013 that bleeds the state of much needed revenue for workforce development and training and innovative, proven initiatives that would create good-paying jobs in our state. The plan they passed gave big tax cuts mostly to profitable corporations and individuals at the very top of the income scale. Legislators based the pursuit of this strategy on a theory that tax cuts lead to higher job creation. However prior experience and research tells us that tax cuts don’t create jobs and they don’t grow the economy.

The 2013 tax cuts haven’t fixed the labor market despite disproportionately going to so-called “job creators” – the wealthiest North Carolinians and profitable major corporations.

As billionaire venture capitalist Nick Hanauer has said, if it was true that tax cuts for the rich created jobs, we would be drowning in jobs — but we’re not.

There are more people looking for work today than before the recession, and many of the jobs out there are low-wage jobs that don’t pay enough to support families or to reverse the decline of our middle class.

In fact, adjusting for inflation, an hour’s work today actually buys less than it did in 2007. Another tax cut isn’t going to fix that.

The way to raise wages and fix the labor market is by investing in our workforce and by empowering more workers to engage in collective bargaining to turn low-wage jobs into good jobs.

Policymakers have for too long asked working families to pay more and settle for less.

The 2013 tax cuts for the wealthy forced the state to slash programs that would have helped workers recover from the recession and rebuild their lives.

Workforce development, reemployment services, child care subsidies, and the Earned Income Tax Credit have all been cut or eliminated. Meanwhile, the cost of job training at community colleges or of pursuing a higher education is more expensive than ever.

Workers are consumers, and that makes us the real job creators in our economy. There aren’t enough wealthy people to make up for the declining buying power of North Carolina’s workers, and another tax cut for the rich won’t change that.

If lawmakers want to create jobs, they need to invest in workers, and investment takes revenue, revenue that is lost by cutting taxes.

And if they want to do something meaningful to put more money into workers’ pockets, they’d be better off encouraging workers to form unions and bargain collectively than by doubling down on the failed ideology that tax cuts are some sort of cure-all that past experience and common sense tell us just isn’t true.