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With an insider’s eye, Hot Dish tracks the tastiest bits of Minnesota’s political scene and keep you up-to-date on those elected to serve you.

Contributors in Minnesota: Jennifer Brooks, Baird Helgeson, Mike Kaszuba, Patricia Lopez, Jim Ragsdale, Brad Schrade and Rachel E. Stassen-Berger. Contributors in D.C.: Kevin Diaz and Corey Mitchell.

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Klobuchar and Franken vote 'yes' on fiscal cliff deal

Posted by: Kevin Diaz Updated: January 1, 2013 - 7:39 AM

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Minnesota’s two Democratic senators cast yes votes on the late-night “fiscal cliff” agreement, which passed 89-8.
 
Sen. Al Franken, who faces reelection next year, expressed reservations about the reach of the deal in reducing debt and helping farmers. But he praised provisions such as tax cuts for the middle-class and the extension of unemployment insurance for the jobless.
 
He added that it was “crucial” to him that the deal worked out between the White House and Republican leaders did not make cuts to Medicare, Medicaid and Social Security.
 
“While I don’t think this package raises sufficient revenues toward paying down the debt or to make the investments in infrastructure, education, and research and development needed to grow our economy, I knew that no bill would have 100 percent of what I wanted,” he said in a statement. 
 
 Sen. Amy Klobuchar also said she had wished for more.
 
“I voted for this compromise because the last thing we should be doing this New Year’s is sticking middle class families with a tax hike,” she said. “I fought for and wanted a larger, more comprehensive plan that balanced revenues and spending cuts.” 

How will the 'fiscal cliff' affect you?

Posted by: Kevin Diaz Updated: December 28, 2012 - 8:18 AM

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So it’s come to this: Almost two months’ worth of a lame duck session of Congress, and with four days to go, no deal on a way to walk back from the year-end “fiscal cliff.”  Just crickets, and an occasional jab at the other side for wasting time. For the past week, hardly anybody from the Minnesota Congressional delegation in either party has uttered a word about it in public, and there’s talk in the U.S. Capitol of “radio silence.”

But the automatic tax hikes and federal spending cuts known as the fiscal cliff will kick in starting next week, unless Congress can make a last-minute deal. If the politicians aren’t talking, or at least not talking constructively, we want to know how it’s affecting you. Tell us your story by sending an e-mail to Whistleblower@startribune.com.
 
And, as usual, you can also sound off in the comments section below.

What the state forecasts say

Posted by: Jennifer Brooks Updated: December 5, 2012 - 11:57 AM

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By Baird Helgeson and Jennifer Brooks

Despite an improving economy, Minnesota state leaders face a new, $1.1 billion budget deficit, according a new economic update released Wednesday.

Minnesota has been pulling itself up during a fragile economic recovery, but the sliver of additional tax revenue is not enough to keep up with rising costs, the numbers show.

The budget numbers, which are always a moving target, are more uncertain than usual as Washington leaders debate the so-called fiscal cliff, which could plunge Minnesota and the nation into another recession.

Minnesota Management and Budget has released the complete economic and budget details. The new budget number will become the foundation of DFL Gov. Mark Dayton’s budget proposal, expected to be released next month.

The improving economy in the current budget cycle will allow the state to repay $1.3 billion borrowed from public schools to balance the state budget. However, the state still owes the schools more than $1 billion and the new deficit means there is no immediate plan to pay back the balance.

“The economy is a little weaker than we thought it would be last February. Not a lot weaker, but a little weaker,” State Economist Tom Stinson said.

The uncertainly around the fiscal cliff is a bigger drag on the economy, Stinson said. If President Barack Obama and Congressional leaders fail to strike a different budget deal, a menu of tax hikes and deep spending reductions will kick in and begin tugging at an already anemic economic recovery.

“There’s no reason for us to have a recession in 2013 or 2014,” Stinson said. “And if we do, it will be self-inflicted. But that doesn’t mean we won’t have one.”

If the two sides reach a deal and bring new predictability to taxes and spending, it could unleash a torrent of pent up spending and give a notable boost to the economy in Minnesota and the nation.

“One can imagine increased business spending and increased business hiring once they knew what the rules could be,” Stinson said.

The twice-annual economic forecast takes into account an array of indicators, including local economy, the national economy, even the financial instability spiraling throughout Europe.

Minnesota's economy is already doing better than many parts of the nation. Minnesota’s unemployment rate is hovering around 5.8 percent, about two full percentage points better than the national average.

Minnesota’s construction sector endured the worst of the last recession, and has suffered the most stubbornly high unemployment rates. Stinson said he finally sees that sector improving in a significant way.

“We are expecting the housing sector to begin to turn around and begin to grow over the next couple years,” he said.

The healthcare industry continues to outperform many other sectors, particularly as Minnesota baby boomers edge toward retirement.

Dayton is going to use the budget forecast data to form his budget proposal, which is likely to include a plan for a massive retooling of the state tax system.

The changing economy has left the state relying too little on income and sales taxes and placing too much reliance on property taxes, Dayton has said.

Dayton’s revenue and budget officials want to distribute the tax burden more evenly, potentially lowering some taxes and increasing others.

Stinson said a reshuffling of the tax laws could finally break Minnesota out of the cycle of annual budget deficits that caused years of statewide reductions and borrowing. State leaders haven’t made a comprehensive reform effort since the 1980s.

“We certainly need to make sure that Minnesota’s tax system is appropriate for dealing with the economy that we have in 2012 rather than the economy that existed in 1984,” Stinson said.

Read the full budget forecast documents here.
 

Full Budget Forecast

Senators ask Obama to spare energy assistance

Posted by: Kevin Diaz Updated: December 3, 2012 - 4:10 PM

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Amid the big fiscal cliff stare-down, U.S. Sens. Amy Klobuchar and Al Franken are asking the Obama administration to increase funding to help low income folks in places like Minnesota make their homes more energy efficient.
 
In a letter to President Obama, the two Minnesota Democrats pressed for the Weatherization Assistance and State Energy Programs, arguing that they help low-income families save money by improving the energy efficiency of their homes.
 
The letter was also signed by 35 Senate colleagues.
 
The total amount involved, some $260 million for both programs in the 2014 budget, amounts to nibbling at the edges in terms of big Washington budget battles. But advocating for energy assistance is a mainstay of constituent service in Minnesota, especially in December.

Ellison recalls Reagan on the 'Third Rail' of American politics

Posted by: Kevin Diaz Updated: November 28, 2012 - 1:54 PM

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Minnesota Democrat Keith Ellison and U.S. Rep. Raul Grijalva of Arizona, co-chairs of the Congressional Progressive Caucus, delivered a letter Wednesday to every House Republican office urging them to listen to President Reagan and take Social Security off the table in current negotiations about the year-end “fiscal cliff.”
 
The letter quotes Reagan from a 1984 presidential debate:
 
“Social Security has nothing to do with the deficit. Social Security is totally funded by the payroll tax levied on employer and employee. If you reduce the outgo [payments] of Social Security, that money would not go into the general fund to reduce the deficit. It would go into the Social Security Trust Fund…Social Security has nothing to do with balancing a budget or erasing or lowering the deficit.”
 
A host of experts, however, have challenged the claim that Social Security doesn’t contribute to the deficit.
 
While that might have been true in Reagan’s time, it’s a suspect argument today. By most estimates, Social Security passed the tipping point between income and outgo in 2010. It now relies on annual infusions of borrowed federal funds to pay benefits.
 
Some of that money is owed to Social Security because of government borrowing from years past, when the system was flush and Congress could use it as a piggy bank to pay for other things. But that doesn’t change the fact that Social Security is no longer funded by payroll taxes alone.
 
It’s a predicament made worse by the retiring Baby Boom generation -- and the temporary “payroll tax holiday,” which is also up for discussion as part of the fiscal cliff talks.
 
Where liberals are on more solid ground is in arguing that Social Security is not nearly as big a drag on the budget as Medicare and Medicaid. But Social Security’s own trustees reported earlier this year that the program’s trust fund will be depleted by 2033, the point at which either scheduled benefits would have to be cut or more money borrowed.
 
For memory's sake, here's Reagan:
 
 

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