Category Archives: Economy

Nolan Bravely Confronts Mayonnaise Crisis

See? There’s slightly less mayonnaise than there could be!

The Christina Nolan campaign is treading dangerously close to self-parody.

Last Wednesday, Team Nolan posted a brief video on social media showing the candidate in front of literally hundreds of mayonnaise jars talking about a mayo shortage.

It was probably her most viral campaign vid to date, but the attention was all negative. Condiment jokes flew around Twitter. The scorn was well-earned; this was bad, really bad. Downright embarrassing, in fact, for a major-party campaign for a seat in the U.S. Senate. Setting, lighting, text, delivery, sound, were all barely acceptable by community access TV standards. It’s something you might have expected from Nolan’s low-wattage Republican opponents.

This video was only 27 seconds long; to enumerate its offenses against politics will take far longer.

Let’s start at the top. Nolan, dressed to make her seem human and relatable. But they went a little too far with it. Lumpy sweatshirt, oddly bulgy tan shorts and flip flops? It’s possible to dress casually without looking like, well, a slob. Also, the colors make her fade into the background.

She stands, rather awkwardly, in front of a nearly-packed supermarket display to talk about supply chain issues. Whose idea was that? Couldn’t they find a display that was actually empty?

And why mayonnaise? (Team Nolan later posted a much better video of her in front of a nearly-empty display of baby formula, which is the supply chain issue of the day. Not mayo.)

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When “Opportunistic Investors” Grab a Chunk of Your Town

Is it just me, or is something slightly… off… about the sale of South Burlington’s University Mall to a global investment firm?

On the surface it seems like good news. Taconic Capital Advisors and Eastern Real Estate will buy the Mall for a tidy $60 million, which happens to be $26.2 million north of its assessed value.

Let’s stop there. A big investment fund buying a declining property in a dying industry for nearly double its assessed value?

Things that make you go hmmmm…

Taconic describes its traders as “opportunistic investors” looking for market inefficiencies. That’s usually Wall Street-speak for “we buy low on assets and squeeze every last dollar out of them.” See: Every time an investment firm buys newspapers.

The above chart, courtesy of the investor-information website “WhaleWisdom,” shows a damn high churn rate for Taconic. The different colors represent different market sectors. As you can see, Taconic specializes on diving into market sectors where they see potential profit and getting out just as quickly.

Given that history, it’s a little hard to credit Taconic’s stated intention to “reenergize” the mall and “build on its success.” First of all, long-term stewardship of an asset doesn’t seem to be Taconic’s game. And second, success?

“That does not compute,” said Mr. Spock when asked for comment.

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Tired Republican Talking Point is News, According to VPR

This week, Vermont’s Public Broadcasting ConglomerateTM has been releasing Part 2 of its (obligatory full name here) VPR – Vermont PBS 2022 Poll. And today’s story about one result is a study in journalistic imbalance.

The article is about the above question: Would you recommend that a young person stay in Vermont or leave?

The total result goes right down the middle: A bit more “leave” than “stay” with a sizable tranche “not sure.” Within that, however, Republicans were far less sanguine on Vermont as land of opportunity. A full 63% of Republicans said “leave.” Among independents, that number was 32%, and for Democrats it was 43%.

That’s perfectly fine fodder for a think piece. But the story that came out of the VPBCTM sausage factory was basically PR for a tired Republican talking point. A talking point that’s been repeated so often, for so long, that it’s become a self-fulfilling prophecy.

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Phil Scott Enjoys a Swim in the Covid Cashpile

As expected, Gov. Phil Scott’s budget address (video/text) was a rollicking affair full of new and expanded programs and tax relief that he touts as providing “transformational” change for Vermont. Yep, these budgets are a lot easier when they’re floating on a sea of federal Covid funds, plus vastly inflated state tax revenues thanks to the purchasing power injected by the feds into Vermont.

To his credit, Scott cautioned that we can’t spend willy-nilly. He said this is a once-in-a-lifetime windfall, and thus a once-in-a-lifetime chance to reset and strengthen Vermont’s economy. “The economic future of our state will be defined by what we do today,” he said at the end of his address. And he warned against spending one-time money for ongoing expenses. “These are one-time funds for one-time challenges.”

Do his proposals match his sweeping rhetoric? In part, but not in full.

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State Economists: Smooth Sailing for Now, Storm Clouds on the Distant Horizon

All smiles for another 12-18 months

Thursday marked the semiannual Festival of Numbers that is the consensus economic forecast, prepared as always by Vermont state economists Tom Kavet and Jeffrey Carr. The topline: Happy times will continue for another year and a half or so, but after that there’s tremendous uncertainty and huge downside risk.

Or, to put it in purely political terms, Phil Scott will enjoy smooth financial sailing through fiscal year 2024 (assuming he wins another term, and there’s no reason to think he won’t), but whoever is governor in 2025-26 may have a real mess on their hands.

The very short-term forecast is for even more money to flow into Vermont’s coffers. Carr and Kavet upgraded their revenue forecast for the rest of FY2022 (ends June 30) by $44 million.

The reason: Vermont’s economy and state revenues continue to be buoyed by the flood of federal Covid relief dollars — more than $10 billion in all. “We had a [fiscal] hole and we’re filling it five times over with federal stimulus,” said Kavet. Those dollars will continue to flow for 12-18 more months. Then comes a return to Earth, and a landing that might be soft, or… a splat on the landscape.

“There is no playbook from the last time the feds dropped $10 billion on our economy,” said Carr, meaning that it’s never happened before. When the money dries up, Carr said, “the amount of risk, especially on the downside, escalates… The economy will transition into something new and different.”

And while the short-term outlook is rosy in the aggregate, that doesn’t mean everyone is doing well. “One hand’s in boiling water, one’s in ice water,” said Carr. “On average, you’re okay.”

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Welfare for the Well-Off

Say, have I told you about my can’t-miss economic development plan for Vermont?

It’s called “The Vermont Open Redistribution of Resources Program (VORRP),” a.k.a. throwing money around. All you do is send state vehicles around Vermont, tossing handfuls of cash out the windows.

Just think. It cuts out all the bureaucracy and red tape that bedevil most government programs. It gets money into the hands of Vermonters as quickly as possible. And unlike many such programs, this one is tried and tested. The multiplier effect, a well-established idea in the world of economics, shows that when the government increases spending, it generates far more economic activity than the original investment.

Trust me. It works.

Well, it probably works at least as well as Vermont’s renowned worker grant programs. They reimburse relocation expenses to people who move to Vermont or move to economically distressed areas in Vermont. Their actual effect is completely unproven, as State Auditor Doug Hoffer has repeatedly shown.

And it remains unproven in spite of a relentlessly sunny study of the programs ordered by the Legislature and released on December 15 by the Department of Financial Regulation. VTDigger posted a story yesterday that reports the study’s findings and Hoffer’s criticism of them. (Which is remarkable in itself. Digger has a habit of ignoring Hoffer’s work.) From my point of view, not only is Hoffer right, but I thought he was a little too easy on the report.

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The GlobalFoundries Deal Is Bad, But Maybe Not Quite Terrible

Had a polite conversation (well, it was testy at first) with someone in the Scott administration who’s involved in the talks with GlobalFoundries over its desire to create its own utility exempt from laws and regulations that apply to all other utilities. As a reminder, the Scott administration and GF have signed a Letter of Intent en route to a formal agreement that would allow GF to have its way.

I came away from the chat with a bit more perspective, but my fundamental belief remains: This is a case of government bowing to the demands of an employer that’s too big to deny.

I’m not naming the official because our chat was off the record, and also because this post reflects my own view of the situation and not theirs.

First, a significant correction. I wrote that the Global Warming Solutions Act set a greenhouse gas emission baseline of 1990 while the LOI uses 2005, when emissions were at their peak. In fact, the GWSA also uses 2005 as its baseline for the 2025 target. 1990 applies for other, later targets.

So in the LOI, GF is agreeing to abide by the 2025 emissions target in the Global Warming Solutions Act. But three things are still true: First, GF’s current emissions are only a tick higher than the 2025 target so the company won’t have to do much at all. Second, the letter is riddled with exceptions and exemptions that would allow GF to exceed the target. Third, the LOI would allow GF to exceed its target under a variety of circumstances.

But there is one line in the LOI that leaves the door open for further state action.

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The Well-Off Are Flocking to Vermont

This graph is wonderful news for those who think Vermont’s economy needs to grow. (It is, as I’ve written before, very bad news for our housing supply.) The pandemic has made our state the most desirable in the nation for affluent Americans.

More desirable than our famously low-tax neighbor, New Hampshire. More desirable than the Sun Belt or the tax havens of Texas and Florida. We’re Number One, baby!

It’s too soon to tell if this dramatic shift will continue. But if it does, then it’s time to rethink our policies across the board, from taxation to education to broadband to economic incentives.

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It’s Amazing What You Can Do With a Billion Dollars

In purely political terms, the Covid pandemic is the best thing that’s ever happened to Gov. Phil Scott. He got to be seen as a decisive leader simply by outperforming the likes of Donald Trump. Throughout the 2020 campaign, he enjoyed a twice-weekly platform on live statewide television and radio. He absolutely dominated every news cycle, and walked to victory in something bigger than a landslide.

And now, state government is swimming in federal relief cash — with more likely on the way. Trump’s CARES Act provided the equivalent of 20 percent of Vermont’s GDP. President Biden’s American Rescue Plan Act is pumping in even more. And if Biden gets his infrastructure bill through, Vermont will get a third massive infusion in less than two years’ time.

The CARES Act alone floated Vermont through 2020 “in aggregate,” as state economist Jeffrey Carr put it. There was pain aplenty, to be sure. But there were winners as well, and the impact was greatly softened by the federal government’s ability (and willingness) to deficit spend. The governor is dead set against raising revenue or increasing the size of state government, but he’s perfectly happy to take whatever the feds will give him.

On Tuesday, Scott unveiled his billion-dollar plan to use a big chunk of the federal ARPA money. It includes just about everything on everybody’s wish list, and provides a huge boost to state initiatives that Scott insisted we couldn’t afford on our own. And the money will be spent over the next four years, which will make it extremely difficult to run against Scott in the next two cycles.

So, hooray for the pandemic!

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Three Mulligans and Counting

Lookin’ a little sweaty there, bud.

Submitted for your consideration: Michael Harrington, commissioner of the Department of Labor, and three-time offender against good government.

The latest offense is a massive cockup in printing IRS Forms 1099 for Vermonters who collected unemployment benefits in 2020. Tens of thousands of people received forms that contained other people’s personal information instead of their own, which is a low-tech kind of privacy breach in our age of digital hacking.

This will require a costly fix. DOL will reprint all 180,000 forms and mail them all out, plus it will provide prepaid envelopes to those who got bad 1099s so they can return the faulty forms at no cost. Harrington also said his department has contacted the Attorney General’s office as required by state law, in case there are legal repercussions.

VTDigger reports that this is DOL’s second data breach since the pandemic began. The first, back in March, saw DOL send nearly six thousand Vermonters’ Social Security numbers to employers not connected with their cases.

But while it was the second data breach, it was the third major administrative failure by DOL during the pandemic.

Deets after the jump.

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