SAM SEDER: Yesterday, in an historic agreement, President Obama announced that a settlement had been reached between banks in 49 states. The president said he hoped the settlement would, “deliver some measure of justice for families.”
In our third story — apparently Scott Walker thinks the best way to provide justice for families is to use the settlement funds to cover a budget shortfall he created.
The settlement between the states and the banks totaled 26 billion dollars. Of that 26 billion, Wisconsin is slated to receive 140 million. Sixty million will be distributed in the form of loan modifications for current homeowners, 17.2 million will be a part of these payments for Wisconsinites who lost their homes through servicing abuses, 31.3 million will be used for refinancing benefits for eligible borrowers who are still making payments but are underwater on their mortgages and 31.6 million should go to the state to be used to protect this from happening again and compensate the state for any loses from the mortgage crisis.
Or, if you ask Governor Scott Walker, to help cover Wisconsin’s budget deficit. Of the 31.6 million dollars going to the state, 25.6 million that will go to closing a budget shortfall.
Now, you may be asking yourself, “What budget shortfall?”
In October, Wisconsin’s Legislative Fiscal Bureau had projected the state would reach the end of the end of the two-year budget in July 2013 with a $73 million surplus. But on the same day the mortgage agreement was announced, the Wisconsin’s Legislative Fiscal Bureau announced they had re-evaluated the state’s financial standing. They now project the state will end the two-year budget term with $143 million shortfall. They credit a projected $272.8 million decrease in estimated tax collections. But that couldn’t have anything to do with the $117 million in tax breaks Walker gave away at the beginning of last year as he was in the process of stripping collective-bargaining rights, could it?
Joining me now is Judd Legum, vice president for communications and new media at American Progress. Thanks for your time tonight.
JUDD LEGUM: Thanks for having me, Sam.
SEDER: All right, so now, Judd — now, we should start off by saying that there’s no document for this deal yet. Everything that we’re talking about is projected and is reported to be in the deal. We haven’t seen the document yet. So, with that granted up front, is Scott Walker legally allowed to use this money for budgetary purposes, based upon what the deal says?
LEGUM: Well, I think there’s certainly some Democratic legislators, if you look at the news reports in Wisconsin, who say they’re not sure whether the attorney general, who right now says he’s in charge of this pot of $30 million is — has all the authority of how it’s spent or not. I think they might like a say in how it’s spent.
But I think, ultimately, it is given to the state, and — as you kind of laid out — this is the portion that they’re supposed to have some discretion over. And the question is, maybe they weren’t expecting somebody like Scott Walker to say, “Well, you know what? We’re not going to worry about the foreclosure crisis that’s been devastating our state for the last few years. We’re going to use it to kind of fix up some of the other problems that I’ve created with some unrelated policies that really started this time last year.”
SEDER: And let me ask you this — I mean, based upon the fact that there is no document yet, right, and that we don’t really — I mean, all the details we know are just basically coming out of what is reportedly in the deal, but if we don’t see a document yet, we don’t — is Scott Walker — I mean, is he jumping the gun here a little bit? I mean, is it — why is he announcing this now? I mean, if the deal is not — if the ink’s not even dry here, why is he announcing this now?
LEGUM: Well, I think what he’s trying to do is avoid some really difficult choices that he would have to make if this — if he didn’t have this pot of money. Obviously, it’s against his constitution to ever consider raising taxes, as you mentioned. He did a big corporate-tax cut to start things off. And he’s got — he’s really already cut a lot of the budget to the bone. So, it’s going to be very problematic for him to institute more cuts, especially with his recall election coming. So, I think he sort of saw this as kind of manna from heaven, to help salve some of his problems.
But I think, politically, it’s looking like it’s going to backfire on him. If you look at the reporting in the Wisconsin papers — I mean, this is already becoming another albatross. And Scott Walker, I think, has really demonstrated, it’s really almost amazing that in 12 months he has become — from the hero of the Republican party, you used to always hear him mentioned, “Scott Walker, he is the future,” — to now, if you watch someplace like CPAC, you don’t hear a lot of the other speakers mentioning Scott Walker as somebody to be a model for the Republican party and that’s because, I think, his policies have been so overwhelmingly unsuccessful.
SEDER: Yeah, it sort of seems like he’s going all in on the “Can I be a pariah?” thing. But, I mean, let’s assume for a second that he does use this money to fill the hole in the budget. Is there any recourse for affected homeowners to retrieve any of that money or no?
LEGUM: Well I think, certainly, this recall election is going to take — have an impact. It’s unlikely they’re going to be able to really spend this money and get it into the budget before the election, depending on how quickly they move.
And I can see the candidate who is running against Scott Walker say, “Elect me, and I’ll make sure this $30 million goes to help homeowners and that we find other ways to close this budget gap.” And I think that that could play into it.
I mean, really, one of the main reasons why we see this budget gap in Wisconsin — Scott Walker ran on a very straightforward pledge, he’s going to create 250,000 jobs in five years. The first year he has created just over 10 — it’s 13,000 jobs. And, for the last six months, Wisconsin has lost jobs. So, that’s why they’ve had to make these revenue — these changes — these massive changes in their revenue predictions because, as the rest of the economy recovers, Scott Walker’s prescription — bust the unions, cut the corporate-tax rates — is just not paying off for the state.
SEDER: Well, yeah, as predicted. Judd Legum of American Progress, thanks so much for your time tonight.
LEGUM: Thanks for having me, Sam.
