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Morning Wire: Protests, Marilyn Strickland, ERFC forecast

“We have to make an effort in the United States, we have to make an effort to understand, to go beyond these rather difficult times… What we need in the United States is not division; what we need in the United States is not hatred; what we need in the United States is not violence or lawlessness; but love and wisdom, and compassion toward one another, and a feeling of justice toward those who still suffer within our country, whether they be white or they be black.”

These were the words of Robert Kennedy on April 4, 1968. He offered these the night of Martin Luther King’s death, standing in the back of a truck before a largely Black audience in Indianapolis. I would encourage you to listen to the speech. I must have listened to it 25 times over the last few days.

I’ve been reflecting on Kennedy and King’s works this week as our country descends into turmoil; as the chaos posed by the very few attempts to corrupt the meaningful and important protests by the many.

We have to work harder in the United States than other countries to keep this experiment in self-governance working. We have to work harder than other peoples to reaffirm the common ties that bind us. And, we have to work harder than at other times in our history to address our challenges, and forestall the worst that may be yet to come.

Don’t lose hope that we can solve the deep problems we face. There is no survival value in pessimism.

With help from Michael Goldberg

1. A run down of protests and responses

Last night, members of the Seattle police department appeared to instigate an attack on protesters. They later appeared to target media for tear gas canisters. Tear gas has been banned for use in war by international treaty since 1919. 

In Bellevue over the weekend, the police chief engaged protesters in dialog in the streets. Former Wire reporter Sara Gentzler tracked events in Olympia, including threats by the police to arrest protesters for “felony assault.” In Couer d’Alene, outside of Spokane, Black Lives Matter protesters were joined by armed citizens to ensure their right to protest, and guard against agitators. 

2. ERFC releases updated economic forecast

The Washington State Economic and Revenue Forecast Council (ERFC) has released its June 2020 preliminary economic forecast – the first forecast they’ve released which incorporates a COVID-19 induced recession. The report outlines several data points which have been updated since February.

Taking a recession into account, the ERFC now expects Real GDP to decline 5.8% in 2020 followed by a 4.0% increase in 2021. In February, before the pandemic kicked into high gear in the US, the ERFC expected GDP to grow 1.9% in 2020 and 2.0% in 2021. In the fourth month period from January to April, private service-providing sectors lost 359,300 jobs, construction lost 47,200 jobs, manufacturing lost 27,700, and government payrolls declined by 11,100 jobs. Washington’s unemployment rate reached 15.4% in April – up from 5.1% in March and 3.8% in February. As the economy recovers, the ERFC expects employment growth to average 4.1% per year compared to the 0.9% average rate expected in February.

3. Marilyn Strickland discusses policymaking and how she plans to navigate Congress

Marilyn Strickland is the former two-term Mayor of Tacoma and President of the Seattle Metro Chamber of Commerce. She is one of 19 candidates running to fill Congressman Denny Heck’s seat in Washington’s 10th District. With a $251,659 haul in the first quarter, Strickland raised the second most in the field. Strickland spoke recently with reporter Michael Goldberg about her candidacy and the experience that informs it. 

As Mayor in post-recession Tacoma and later as President of the Seattle Metro Chamber, Strickland honed her belief in bringing the public and private sectors together to move the ball forward on policy.  In the conversation with Mike Goldberg, she offers her take on expanding the role of the federal government to build more affordable housing, workforce development, and which members of Congress she’d most like to work with.

4.  Poll reveals majority support for raising taxes on the wealthy

Results from a new GBAO poll of 500 Washington State voters revealed a sample of sentiments surrounding COVID-19 and possible state responses to the economic crisis catalyzed by the pandemic. As far as implications for the Legislature, 63% of respondents favored a recovery approach that would raise taxes on the wealthiest households. 60% approved of providing loans and grants to struggling businesses. 62% said they supported instituting a capital gains tax to “fund public services and provide support to families and businesses struggling due to coronavirus.” Meanwhile, 69% said they opposed balancing the budget through cuts to social services without raising taxes.

A capital gains tax would be a meaningful tool to help address the stark regressivity of the state tax code. But, in a recession, few folks sell their asset holdings like stock or small businesses. In other words, a capital gains tax wouldn’t help the budget deficit state policy makers face.

5. What the unemployment rate could mean for state budgets

In an interview with the Pew Charitable Trusts, Michael Horrigan, President of the W.E. Upjohn Institute for Employment Research, explained that the unemployment rate in each state likely understates the true magnitude of the economic collapse in the labor market. Horrigan noted that for every percentage point increase in the national unemployment rate above its prior year’s average, state governments collectively face an annual budget shortfall of $45 billion.

On average, Horrigan said, a state loses about 3.7% of its tax revenue for every percentage point increase in its unemployment rate. Washington is one of 15 states to have lost at least 15% of their March pre-COVID employment base. The official quarterly revenue forecast is set to be released on June 17th. Projections indicate that Washington will face a $3.8 billion shortfall in the next biennium – about a 14% deficit.

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