flag image
Form Wealth Management

How's your economic recovery going?

September 29, 2010 | 07:37 AM
For some time now, many Wisconsin residents have found themselves in a precarious position of trying to keep their head above water in what has been one of the most turbulent of economic times. Since the collapse of the financial and housing markets, people of all income levels have had to reevaluate and reprioritize both their spending habits and their varied sources of income. Unfortunately, state and federal government has not done likewise, only creating more anxiety for businesses and families.

Recently, a report was issued by economists with the National Association for Business Economics which stated the recession — which began in December 2007 — ended approximately 14 months ago, and the expansion has already begun. While technically the figures offered in the report may be accurate, the fact remains many individuals are not feeling any relief from that news. The unemployment rate in Wisconsin is holding steady for now, but is still hovering at about 8 percent. Two years ago, that number was about half what it is now. Consumer spending is stagnate and household incomes are relatively flat, though a slight increase may be occurring.

The bottom line is that Wisconsin, like most other states, continues to scratch and claw its way out of this economic hole, but the pace is much slower than most can afford. The projections, at this point in time, are that recovery will pick up in 2011 through 2013, but it may be difficult for some to hold on and actually realize any new resurgence. These are tense times and much of those predictions may or may not factor in the impact of more taxes and spending from state government.

Over the last two years, and during the most chaotic moments of the recession, the Legislature approved a 7-percent increase in spending to the $63 billion dollar budget, and $4 billion of new taxes on businesses. It was an incredibly short-sighted move by those who supported such actions, which could have a much longer lasting effect than any of these reports, charts, or graphs can offer. We have heard the news of one company after the next leaving Wisconsin, or considering leaving, and done little to nothing to keep them here. Making matters worse, legislative action by Democrats and the governor have punished those companies, and are potentially forcing their hand and pushing them out.

The next Legislature and Governor must make a concerted effort to getting the state's fiscal house back in order if any of this projected economic recovery is to materialize in the months ahead. It is critical to our success and prosperity as a state to get in line with what most families have been doing for some time now: stop spending and start reducing. Moreover, if the Legislature continues on a path of tax increases or tax shifts in order to generate more revenue, we will lose any anticipated growth. All of it will be for naught if lawmakers do not come to grips with the reality of the situation and understand what real people already understand.

While much of the economic news is dismal, it is not all bad. There are signs of recovery, particularly as the unemployment numbers have dipped slightly, and is now about two points lower than the ten percent national average. Some household incomes are rising, but many are still trying to catch up and make amends for increased costs of living, as well as disruptions in their income from 2007 to present day. Existing home sales have increased in Wisconsin by 16 percent, which is several points higher than other Mid-West states and the nation. Reports are showing a slight turnaround in our economy, but reports do not put food on the table or help pay the mortgage. Still, the engines are starting to churn again, but we have yet to get up to full speed, and getting there may take time.

As I have said many times over, the focus must remain on creating jobs, and certainly, rejecting any proposals that stifle job creation.Tax revenue will return to state coffers, but only if there are a sufficient number of jobs to support state expenditures. Inflicting more pain through higher taxes is simply not sustainable, and does nothing to create those much-needed jobs. State budgeting should be "zero-based," that is, base funding in each government program on the current fiscal year, rather than on the previous year's funding level. Wisconsin's economy will recover, but it begins with your economic recovery — which leads to a basic question: how's it going?

Kedzie can be reached in Madison at P.O. Box 7882, Madison, WI, 53707-7882, or by calling toll-free (800) 578-1457. He may be reached in the district at (262) 742-2025 or on-line at www.senatorkedzie.com.

Comments ()
Walworth County