Category Archives: Economy

Koch versus ‘corporate cronyism’

Charles G. Koch, chairman and CEO of Wichita-based Koch Industries, penned a Monday commentary in the Wall Street Journal headlined “Corporate Cronyism Harms America” pointing to such government policies as “affordable housing” quotas, the Community Reinvestment Act and the “Federal Reserve’s artificial, below-market interest-rate policy” as causes of “the dreadful condition of our economy.” Koch wrote: “Far too many businesses have been all too eager to lobby for maintaining and increasing subsidies and mandates paid by taxpayers and consumers. This growing partnership between business and government is a destructive force, undermining not just our economy and our political system, but the very foundations of our culture.” Koch acknowledged that some of the energy subsidies and mandates benefit Koch Industries but called for an end to such “distorting” and “corrupting” policies, concluding: “If America re-establishes the proper role of business in society, all kinds of benefits will accrue. Our economy will rebound. Our liberties will be restored. And when President Obama tells an entrepreneur ‘You didn’t build that,’ everyone will know better.”

What grade should Obama get on economy?

While acknowledging that presidents have limited influence on the economy, Washington Post columnist Robert Samuelson gave President Obama a C-plus on his handling of the economy. He said Obama deserved an A-minus for his first six months in office, when he and Congress worked to keep the economy from going over the cliff. But for Obama’s remaining time in office, Samuelson gave him a C-minus or D. He faulted Obama for shifting focus to health care reform, which Samuelson said fanned policy uncertainty and undermined recovery. “His mistake was assuming he could pursue his political agenda without compromising the recovery,” Samuelson wrote.

NetApp expansion boosts Wichta’s spirit

Beaten down by all the aircraft layoffs, Wichita needed some good economic news. And it got it Thursday with NetApp’s announcement that it plans to add 400 jobs at its Wichita facility. These are good-paying jobs – averaging $73,000 a year – that will help diversify Wichita’s economy. Congratulations to local and state economic development officials for helping make this expansion happen, and thanks to NetApp for believing in Wichita. We needed the boost.

Nation’s fiscal gap is huge and growing

The nation’s fiscal gap is much bigger than the official deficit and debt. “The fiscal gap is the present value difference between projected future spending and revenue,” economist Laurence Kotlikoff and columnist Scott Burns wrote. It includes both “official” and “unofficial” spending commitments, which is a more realistic projection of spending. According to their calculations using Congressional Budget Office forecasts, that fiscal gap is now $222 trillion. And growing fast.

Arts are an economic driver for states

Gov. Sam Brownback’s reversal on arts funding was highlighted in a Stateline.org article on how states are recognizing the economic benefit of the arts. Brownback vetoed state funding last year, which also caused the state to lose about $1.2 million in federal and regional arts grants. But this past session, he supported the creation of the Creative Arts Industries Commission. Nationwide, states increased funding an average of 8.8 percent this fiscal year, according to estimates by the National Assembly of State Arts Agencies. Michigan’s state budget director called his state’s large increase in arts funding an investment in the future. “In order to have a robust economic climate you’ve got to have a robust quality of life, and the arts are a big part of that,” John Nixon said. But the article noted that Kansas likely will miss out again this year on federal and regional arts grants, and that some local organizations, including the Junction City Arts Council, won’t survive the wait for funding.

‘Taxmageddon’ would hit Kansas, nation hard

How big would the tax increase be if the Bush tax cuts expire on Jan. 1, 2013? “The increased tax payments of all the families in Kansas’ 4th District put together totals a staggering $1 billion, $4.2 billion from all Kansans, and $494 billion nationwide,” wrote Rep. Mike Pompeo, R-Wichita. “The tax increase would target Kansas families, low-income workers and retirees – and it would be the largest tax hike our state has ever had to endure.”

Pro-con: Should online retailers collect sales tax?

Retailers compete with one another every day on price, service, convenience and selection. But under the current system, the law gives remote sellers a singular advantage that brick-and-mortar stores can’t match because they aren’t required to collect sales tax. As stores have lost business, communities have lost much-needed jobs. In Ohio, for example, a recent study found that leveling the playing field for local retailers could add 15,000 jobs to the state’s economy. Forcing online retailers to collect sales tax also would provide revenue for cash-strapped state and local governments – more than $23 billion this year nationally, according to the National Conference of State Legislatures. In the Senate, Democrats and Republicans sponsored a bill called the Marketplace Fairness Act that would require online retailers to comply with state sales-tax laws. To avoid burdening smaller merchants with compliance costs, the bill exempts online retailers with less than $500,000 in annual sales. In other words, casual sellers just looking to make a few extra bucks on eBay would have nothing to fear. During this time of economic challenge, Main Street businesses across America already have paid their fair share. Now online retailers should, too. – Matthew Shay, National Retail Federation

There is no “sales-tax exemption” for out-of-state vendors. State and local sales taxes are owed by consumers, not producers. If the good or service is provided by an in-state firm, that firm must collect the applicable sales tax from the consumer. If the stuff comes from a “remote” seller that has no contact with the consumer’s state, the sale is not “tax-free”: The consumer owes a “use tax” equivalent to the local sales tax. However, state and local governments would rather not trouble their own citizens with enforcing that rule. Thus they demand a federal law that would allow them to impose collection and remittance obligations on out-of-state sellers whose goods or services happen to be demanded in, and therefore end up in, the local jurisdiction. What we have here is not a tax or equity problem but an enforcement problem. And no one, including the state officials and federal legislators who yelp about “fairness,” seriously believes that problem warrants a central solution. – Michael S. Greve, American Enterprise Institute

Kansas should be hard to miss at Farnborough

Good for Gov. Sam Brownback and Commerce Secretary Pat George for planning to join representatives of the Greater Wichita Economic Development Coalition in promoting Kansas-made aircraft at the Farnborough International Airshow in England Monday through July 15. Wichita’s aircraft makers are Kansas’ biggest exporter, representing more than 18 percent of all exports from the state. The bigger and more prominent the presence of Wichita’s planemakers at such an international air show, the louder the message will be about how the Air Capital of the World can serve the world marketplace for aircraft.

Private-sector comment could cost Obama

President Obama’s comment last week that “the private sector is doing fine” could be costly in the coming election. Though Obama quickly tried to explain what he really meant to say, the comment is manna for Republicans eager to portray Obama as out of touch. Chris Cillizza of the Washington Post noted: “The problem for Obama is that his remark plays directly into the story that Republicans are trying to tell about him – that he is a big-government liberal who thinks the answer to all problems is expanding the federal bureaucracy and who lacks even a basic understanding of how the private sector works.”

A Romney-Bair ticket?

If Mitt Romney wants a running mate to counter the impression that his interests mirror those of a financial sector “that has run roughshod over the nation and practically brought the nation’s economy to its knees,” he should pick former Federal Deposit Insurance Corp. Chairwoman Sheila Bair (in photo), argued Huffington Post blogger Raymond J. Learsy. He wrote of the native Kansan: “Bair, a moderate Republican and holdover appointee from the Bush administration, fought unstintingly against the crony capitalism that had overtaken our government.” Most recently, Bair argued in a Fortune commentary that JPMorgan Chase is too big to manage, let alone regulate, and that CEO Jamie Dimon should take steps to downsize. “The best way for Dimon to provide a better return to his investors is to recognize that his bank is worth more in smaller, easier-to-manage pieces,” Bair wrote.

Racial divide on which candidate would help middle class

Middle-class white voters who are struggling financially favor GOP presidential candidate Mitt Romney over President Obama by 58 to 32 percent, according to a new Washington Post-ABC News poll. Middle-class nonwhite voters prefer Obama by a better than 3-1 majority. Among all voters, 50 percent think that Obama would do more to advance the economic interests of middle-class Americans, compared with 44 percent who think Romney would do more. Of those surveyed, 68 percent think Romney would do more to advance the interests of the wealthy.

South Wichita won with Southfork vote

It was a long time in coming, but the neglected south side of Wichita won big with Wednesday’s 3-2 vote by the Sedgwick County Commission to support a tax-increment financing district for developer Jay Maxwell’s Southfork project. TIF districts carry risk and need to be carefully vetted. But Southfork passed muster at the city and county governments for a reason – it will transform 72 acres near I-135 and 47th Street South, including land now in a floodplain, and put a mix of retail and office space, hotels and restaurants in a part of town overdue for economic development.

Things looking up for Cessna

It’s good news for Wichita and its aviation workforce that Cessna Aircraft Co. is recalling or hiring about 150 employees and increasing its sales force. Though Cessna’s hiring won’t offset the latest 350 layoffs at Hawker Beechcraft, it is one welcome indicator that the market for general aviation is showing signs of renewed life. Cessna also has seen recent upticks in orders, deliveries and revenue, helping boost owner Textron in potential investors’ eyes.

Officials quick to reaffirm safety of beef

The state’s political leaders were quick to reaffirm the safety of beef after the announcement this week that mad cow disease was discovered in a dead dairy cow in California. No meat from the cow was ever headed for the food supply, and the disease isn’t transmitted through milk, experts say. Sen. Pat Roberts, R-Kan., issued a joint statement with Senate Agriculture Committee Chairwoman Debbie Stabenow, D-Mich., saying the fact “that we’re hearing about this discovery and that there was never any threat to consumers in this case shows that the mechanisms in place for protecting our food supply worked as intended.” Sen. Jerry Moran, R-Kan., and the state’s four U.S. representatives also said in a statement that the announcement “reaffirms the fact that our food-safety system works.” Gov. Sam Brownback said Tuesday that consumers should remain confident that beef and milk in Kansas are safe, adding that he “had beef for lunch.”

Economy remains weak spot for Obama

President Obama’s overall job approval rating is back to 50 percent, according to a Washington Post/ABC News poll. And he has an 8 percentage point lead over Mitt Romney. But those polled said that Romney would do a better job with the economy and the budget deficit. Obama also got low marks for his handling of gas prices, though a majority blamed other countries and U.S. oil companies for the high prices. Romney’s biggest challenges are with women and with likability (Obama leads Romney on likability by 38 points).

Property taxes are reason for poor ranking, not income taxes

The first speaker at Wednesday’s economic development conference in Wichita, sponsored by the Kansas Policy Institute, discussed how Kansas is the 47th best state to run a mature business and 48th for starting a new company, according to a recent Tax Foundation study. But Kansas ranked poorly in that study because it has high property and sales taxes, not because of its income taxes. Gov. Sam Brownback’s tax plan would worsen this disadvantage by making permanent the state’s temporary sales-tax increase. And his school-finance plan would lift the lid on local property taxes. It’s also worth noting that Texas, which Brownback and others point to as the model for Kansas, ranked 42nd for new businesses.

Pro-con: Should Congress raise minimum wage?

There are numerous ways to address the issue of economic inequality – an issue that has gained traction as the Occupy movement has spread beyond Wall Street. I believe we can do something to raise the wages of our lowest-paid workers right now. I recently saw a chart that demonstrates what’s been going on in the economy: The rich are getting richer, and the rest of us are getting poorer. It showed that the ratio of CEO pay to worker pay was 42-to-1 in 1980 – with the average CEO making $1.6 million. That ratio climbed to 107-to-1 in 1990 – with the average CEO making $3.3 million. By 2010 that ratio had soared to 325-to-1 – with the average CEO making $10.8 million. In 1968, the federal minimum wage stood at $1.60 an hour. If workers were earning the same amount in today’s dollars, adjusting for inflation, they would be paid more than $10 per hour, not the current $7.25 per hour. During that same time, median household income has risen roughly 14 percent while the value of the minimum wage has fallen by 30 percent. The solution is obvious: Congress should restore the minimum wage to its historic purchasing power by raising it to $10 per hour. It would enable low-wage employees to be rewarded for their hard work. It also would help boost the economy by getting income into the hands of those most likely to spend it, thereby creating additional demand that businesses sorely need during this shaky economic recovery. – Don Kusler, Americans for Democratic Action

When economic times are tough, it’s tempting to want to push for an increase in the minimum wage. Supporters see it as giving the deserving poor a badly needed raise. If we only mandate that employers raise the pay floor for their employees, those who earn the least will see a nice pay bump. And if there were no unintended consequences from government-mandated minimum wages, perhaps it would be a fine idea. But there are harmful knock-on effects that hurt some of the economy’s most vulnerable participants: young workers and those with few skills. Minimum-wage laws do not help reduce the number of families living at the poverty line. In fact, the minimum wage may harm low-income families by reducing the number of jobs available for which they are qualified. Given that difficult labor-market picture, it’s a mistake to enact any regulations that make it harder for employers to hire. – Nick Schulz, American Enterprise Institute

Nearly all income growth going to the wealthy

Federal reports keep showing that the economy is growing, so why isn’t it being felt by most Americans? Because 93 percent of the income growth in 2010 went to the wealthiest 1 percent of American households, according to a new study by a University of California economist. “While never putting a premium on economic equality, America has always prided itself on being the pre-eminent land of economic opportunity,” columnist Harold Meyerson wrote. “If all of this nation’s wealth is captured by a narrow stratum of the very rich, however, that claim is relegated to history’s dustbin.”

Kansas a better-than-average state to make a living

Kansas rated better than average in a new ranking of the best states to make a living. MoneyRates.com examined data on income, cost of living, taxes and unemployment. Virginia had the highest adjusted average income of $43,677. Kansas was No. 19 at $37,008. Of our neighboring states, only Colorado ($40,490) had a higher average income than Kansas.

Outstanding news about Hawker Beechcraft

All of Wichita can second the cheer that went up among Hawker Beechcraft employees over the company’s decision not to close Plant 1 after all. The move, stemming from a joint partnership of the company and the Machinists union, spares hundreds of jobs from elimination or outsourcing. In a statement, the HBC Joint Partnership Steering Committee said: “In order to reduce lead time, improve response time and optimize cost, fabrication and assembly operations will be streamlined and balanced between our facilities. Plant I plays a critical role in this strategy.” With uncertainty still dogging the aviation-manufacturing sector – and lots of industry speculation about Hawker Beechcraft’s future under new CEO Steve Miller – such an optimistic sign comes as a boost to the community and its standout aviation workforce.

Pro-con: Is Obama right in seeking more tourists?

President Obama’s decision to speed up visa processing for low-risk Chinese and Brazilian travelers will give the recovering U.S. economy a welcome jolt of new energy this summer and beyond. The president’s executive order, which he announced at Walt Disney World earlier this year, is projected to create 1.3 million jobs and produce more than $860 billion in economic activity. From 2000 to 2010, the U.S. experienced a lost decade when it came to attracting international visitors to our country. The president’s new initiative can help put the United States back on top as the world’s No. 1 destination. Americans should rest assured that speeding up our tourist turnstiles does not mean relaxing post-Sept. 11 security measures. The fact is that our surveillance and security systems, and the technology that buttresses them, have become increasingly sophisticated over the past decade. Making the entry process more efficient for highly trusted travelers allows our nation’s security force to concentrate on more likely suspects and expands its overall effectiveness. – Roger Dow, U.S. Travel Association

President Obama’s willingness to sacrifice national security to raise his public approval rating was glaringly evident when he flew to Walt Disney World to tout looser visa restrictions for Brazilian and Chinese visitors to the United States. While the leaders of Brazil and China often take anti-U.S. positions on the world stage, Obama claimed the move would help the slumping travel industry by bringing millions of new free-spenders into the country without weakening national security. But the Government Accountability Office conceded last year that there still is no effective way to track the more than 70 million foreign visitors who annually come to these shores on tourist and other short-term visas. The GAO also has estimated that half of the nation’s illegal aliens are people who have overstayed their visas. – Amy Ridenour, National Center for Public Policy Research

Romney repeating old stimulus myth

GOP presidential candidate Mitt Romney has been repeating an old myth about President Obama having said that if Congress passed its stimulus plan, unemployment would stay below 8 percent. In fact, Obama never said that. The myth is based on a report that two of Obama’s economic advisers drafted before Obama was sworn in as president. “This was merely a staff report about a generic stimulus package, not even Obama’s own plan,” according to Washington Post fact checkers. The report also warned several times that this was merely a projection and there was considerable uncertainty. Obama did say that if “dramatic action” were not taken, “the unemployment rate could reach double digits.” That ended up happening anyway.

Do no-tax states outperform others?

A new study by the Institute on Taxation and Economic Policy in Washington, D.C., contends that states with “high-rate” income taxes actually do as well as or better economically than states without income taxes, contrary to what Gov. Sam Brownback and others say. It found that most of the no-tax states had lower median income growth, lower economic output per capita, and about the same unemployment rate as the “high-rate” states. Some of the economic activity in no-tax states such as Texas is fueled by population growth. But the study argued that this growth is more related to weather and Hispanic immigration than tax structure. It also argued that oil and natural-gas production, not tax policy, is a driving force behind economic gains in several no-tax states.

Safety net not just for the poor

The poorest U.S. households no longer receive the majority of government benefits, the New York Times reported. The share of benefits going to the bottom fifth of households declined from 54 percent in 1979 to 36 percent in 2007. But as benefits to the middle class have expanded, federal tax money to pay for the benefits has not. According to the Times analysis: “In 2000, federal and state governments spent about 37 cents on the safety net from every dollar they collected in revenue.… A decade later, after one Medicare expansion, two recessions and three rounds of tax cuts, spending on the safety net consumed nearly 66 cents of every dollar of revenue.”

Halftime in America, from a libertarian perspective

Reason.com has a spoof video of Chrysler’s “Halftime in America” Super Bowl ad. The narrator, in a raspy Clint Eastwood impersonation, says: “People are out of work and they’re hurting. And they’re wondering where all their money went. Well, $12.5 billion of it went to Chrysler. In the form of a bailout. But it’s OK, because Chrysler is all-American. Though, technically, 58.5 percent of Chrysler is owned by an Italian corporation. And Chrysler manufactures many of its vehicles in Canada. And Mexico. But I guess that doesn’t make for a great commercial.”