1. Fiscal and Economic Issues Discussion Group
August 2016 Meeting
NWSOFA
Introductions of Presenters and Participants

2. NWSOFA Fiscal & Economic Issues NWSOFA Resources
NWSOFA
Economic Opportunity
To find our next meeting
Analyses of presidential candidates’ policy proposals

3. NWSOFA Fiscal & Economic Issues
When we review policy issues we ask:
How will this policy issue affect economic growth and jobs?
How will this policy issue affect the budget deficit, both now and in the future?
We spend a lot of time examining economic and jobs growth and budget issues at the national level
We started looking at the Illinois budget more last year
So how is the U.S. economy doing?
How are we doing with the federal budget deficit?

4. NWSOFA Fiscal & Economic Issues Perception on Direction of the Country is not good

5. NWSOFA Fiscal & Economic Issues Why it isn’t full recovery yet, i. e
NWSOFA Fiscal & Economic Issues Why it isn’t full recovery yet, i.e. the U-6 Unemployment Rate Historical Range ( ) vs. June 2016 Level
July 2016 = 9.7%, i.e. still a lot of slack in the labor market

6. NWSOFA Fiscal & Economic Issues Why it isn’t full recovery yet, i. e
NWSOFA Fiscal & Economic Issues Why it isn’t full recovery yet, i.e. the U-6 Unemployment Rate

7. NWSOFA Fiscal & Economic Issues The graphs we usually see from the White House (and OFA). Is the country going in the right direction? Most people can’t tell from these graphs.

8. NWSOFA Fiscal & Economic Issues The graphs we should see – GDP trending up for 6.75 years, jobs for over 6.0 years Is the economy going in the right direction? Yes !!

9. NWSOFA Fiscal & Economic Issues This actually agrees with how people view the direction of their personal situation

10. NWSOFA Fiscal & Economic Issues Unrealistic Expectations - Big wage gains are NOT a normal part of a recovery

11. NWSOFA Fiscal & Economic Issues The Federal Budget Deficit – The issue is increasing deficits in future years

12. NWSOFA Fiscal & Economic Issues Fiscal Year Totals (billions of dollars) Bush Budget Years    |           Obama Budget Years            
2008
2009
2010
2011
2012
2013
2014
2015
Receipts
2,524
2,105
2,163
2,303
2,449
2,774
3,021
3,249
% of GDP
17.0%
14.6%
14.7%
14.9%
15.3%
16.7%
17.5%
18.3%
Outlays
2,983
3,518
3,457
3,603
3,538
3,454
3,506
3,759
20.1%
24.4%
23.5%
23.3%
22.1%
20.8%
20.3%
20.7%
Deficit
-459
-1,413
-1,294
-1,300
-1,089
-680
-485
-439
-3.1%
-9.8%
-8.8%
-8.4%
-6.8%
-4.1%
-2.8%
-2.5%

13. NWSOFA Fiscal & Economic Issues
Since our last meeting, Illinois jobs numbers were updated from January through March, with prior years restated significantly job growth went from +66,800 to +88, job growth went from -3,000 to +51, is off to a good start - +30,600 jobs in first five months

14. NWSOFA Fiscal & Economic Issues Job Growth in Illinois

15. NWSOFA Fiscal & Economic Issues Illinois’ Alleged Spending Spree with the Higher Income Tax Rates

16. NWSOFA Fiscal & Economic Issues The 5th most regressive state and local tax structure in the country

17. NWSOFA Fiscal & Economic Issues Rauner’s FY 2017 Budget:
$3.5 billion shortfall in estimated revenue vs. proposed spending
Revenue estimate may be $725 million high
In other words, Governor Rauner’s budget needs between $3.5 and $4.2 billion in additional revenue to be in balance

18. NWSOFA Fiscal & Economic Issues Some revenue ideas from CRS since all budgets need revenue
Reinstating the 5% income tax rate for another 2-3 years ($5 billion per year)
Expanding the state sales tax to include all consumer services ($2 billion per year) [regressive]
Taxing a percentage of retirement income for individuals with an Adjusted Gross Income over $50,000 per year ($1.2 billion per year) [doubtful due to politics – seniors vote]
Passing a constitutional amendment to allow a progressive income tax [2016 ballot, FY 2018 is 1st impacted year]

19. NWSOFA Fiscal & Economic Issues The IL economy that Rauner wanted to “turnaround”

20. NWSOFA Fiscal & Economic Issues The IL economy that Rauner wanted to “turnaround”
In 2014, the year before Governor Rauner took office, Illinois added 88,000 jobs per the Establishment survey, unemployment declined by 2.1% and employment increased by 94,701 per the Household Survey. The job gains were the 2nd best year since 1998, trailing only The employment gains were the best since For 2015 under Governor Rauner jobs were up 51,400, unemployment is up 0.1% and employment is up 48,203.  (Dec 2014 – December 2015) So Governor Rauner is accomplishing a “turnaround”—a negative “turnaround” Our last real (negative) turnaround governor was George Ryan (Jan Jan 2003) who presided over a 110,532 person decline in the labor force, a 252,273 person decline in employment, and a loss of 86,400 jobs in the Establishment survey. (Dec Dec 2002) By contrast under Blagojevich and Quinn we increased the labor force by 221,523, increased employment by 234,954, and increased jobs by 46,100. (Dec Dec 2014)

21. NWSOFA Fiscal & Economic Issues
Let’s talk about the presidential candidates’ policy proposals
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