The Truth in Wisconsin

WATCH Olsen vs. Wisconsin Families:

The "Not My Fault" Excuse

Once again, Wisconsin Supreme Court Justice David Prosser, a close Republican ally of Gov. Scott Walker (R) is claiming that his actions are not his fault. Justice Prosser who has been on the court since 1998, ran as the incumbent candidate in the the Wisconsin Supreme Court election in April, 2011. Assistant Attorney General JoAnne Kloppenburg ran against Prosser in the election. Prosser has a history of inappropriate behavior. In March, 2011, Prosser declared that he was goaded into insulting the Wisconsin Supreme Court Chief Justice Shirley Abrahamson.

As the deeply divided state Supreme Court wrestled over whether to force one member off criminal cases last year, Justice David Prosser exploded at Chief Justice Shirley Abrahamson behind closed doors, calling her a "bitch" and threatening to "destroy" her. ... "In a fit of temper, you were screaming at the chief; calling her a 'bitch,' threatening her with '...I will destroy you'; and describing the means of destruction as a war against her 'and it won't be a ground war,'" [Justice Ann Walsh] Bradley wrote in a Feb. 18, 2010, e-mail to Prosser and others.

Prosser acknowledged his outburst, but said he was justified—and then proceeded to blame it on the woman he had verbally assaulted:

"I probably overreacted, but I think it was entirely warranted.... They (Abrahamson and Justice Ann Walsh Bradley) are masters at deliberately goading people into perhaps incautious statements. This is bullying and abuse of very, very long standing."

After the April election, Assistant Attorney General JoAnne Kloppenburg had initially declared victory by a an unofficial 204-vote lead over Justice David Prosser, as reported by the Associated Press. However, Waukesha County Clerk Kathy Nickolaus, subsequently found more than 14,000 votes that had not been reported from her predominantly GOP county which gave conservative Justice David Prosser a 7,500-vote lead.

Controversy has followed Prosser since the election.

Democrats in Wisconsin were crying foul Friday after a significant vote-count change in the hotly contested Supreme Court election gave the conservative incumbent the lead in a race that could decide the fate of the state's new divisive collective bargaining law.

Waukesha County Clerk Kathy Nickolaus said it was "human error" that resulted in more than 14,000 votes from her predominantly GOP county not being reported on Tuesday. The corrected totals gave conservative Justice David Prosser a 7,500-vote lead, according to unofficial tallies, and undid the earlier likelihood of a recount.

Rep. Peter Barca, Democratic Assembly minority leader, said Nickolaus' revelation "raises disturbing questions, particularly in light of her partisan history."

"The new Supreme Court race vote totals she 'discovered' during canvassing not only swung the election but also put the race just barely past the amount needed to trigger a state-financed recount," he said in a statement.

Recently, Prosser is being accused of chocking the Wisconsin Supreme Court Justice Ann Walsh Bradley.

Justice Ann Walsh Bradley came forth with a statement late Saturday saying that fellow Justice David Prosser choked her and refuting claims that she attacked him first.

"The facts are that I was demanding that he get out of my office and he put his hands around my neck in anger in a choke-hold," she said. "Those are the facts and you can try to spin those facts and try to make it sound like I ran up to him and threw my neck into his hands, but that's only spin.

"Matters of abusive behavior in the workplace aren't resolved by competing press releases," she said.

"I'm confident the appropriate authorities will conduct a thorough investigation of this incident involving abusive behavior in the workplace."

Prosser's behavior against several female Chief Justices include both verbal and physical aggression. An unnamed source who is on Prosser's side of the argument has now accused Bradley of initiating the violence.

"She charged him with fists raised," the source told the paper, saying that Prosser "put his hands in a defensive posture" to block her, and made contact with her neck. Bradley is then said to have immediately complained of being choked, while another, unnamed Justice responded, "You were not choked."

Prosser has denied the allegations against him.

For his part, Prosser -- who had initially declined to publicly comment -- released a statement containing a denial, and that would make no further public comments: "Once there's a proper review of the matter and the facts surrounding it are made clear, the anonymous claim made to the media will be proven false. Until then I will refrain from further public comment."

There are now calls for Prosser to step down or be removed. Think Progress has Four Ways Justice David Prosser Can Be Removed from Office.

Wisconsin Supreme Court Justice David Prosser has exploded. He has cursed. He has threatened. He has choked. He has acknowledged. He has denied. He is a bully who excuses his behavior by blaming his victim.

Spinning the Loss in Wisconsin

Wisconsin Gov. Scott Walker has an agenda. Wisconsin Supreme Court Justice David Prosser was vocal in his support of Walker and the Governor's measures to bust unions and deny collective bargaining. While the Republicans are trying to claim that their plan for the country is bold, others might be more accurate in calling it extreme or radical. PR Watch found that the win for a liberal judge in the state of Wisconsin has thrown the conservative plan off its track.

While Wisconsin Congressman Paul Ryan prepares to shut down the federal government to prove that government is bad, analysts say the radical agenda of Wisconsin Governor Scott Walker suffered a major set back today as his good friend incumbent Justice David Prosser was defeated for Wisconsin Supreme Court. The AP unofficial vote count, with 100 percent of the precincts reporting, puts challenger Joanne Kloppenburg ahead by slightly more than 200. A recount is doubtless on the way.

In a state that has never unseated a conservative Supreme Court justice, people power fueled a concentrated effort to deny the Imperial Walker one branch of government. Walker’s opponents hope a Kloppenburg victory will swing the Supreme Court in a more independent direction and set the stage for the court to strike down Walker’s controversial collective bargaining law. While the fate of the law is uncertain, Kloppenburg’s three week sprint from dead-in-the-water to victor may give Walker, Ryan and other Wisconsin politicians pause as they rush to radically reshape government to benefit the privatizers and profiteers.

Sleepy Court Race Electrifies the State

While it may seem odd to many Americans, Wisconsinites like to elect their judges. Although an elected judiciary has its problems (namely, unseemly high-dollar elections), the ballot box sometimes hands citizens a rare opportunity to un-elect judges -- and that is what many Wisconsinites decided to do today. Prosser, a former Republican Assembly Speaker, stumbled when his campaign embraced Walker’s election.

The Kloppenburg victory is stunning. Six weeks ago, sitting Judge David Prosser was a shoo-in and the challenge by Assistant Attorney General Kloppenburg was a snooze fest. But something happened on the way to the high court. A governor, who was elected to create jobs, took office and quickly moved to disenfranchise voters and kneecap unions so they could no longer be a viable force in state elections. The raw power grab sparked a spontaneous uprising, the likes of which this state has never seen, and the Supreme Court race was the next vehicle for people to have their voices heard.

As noted in Salon, this judicial race was very important to Walker in order for him to fulfill his political agenda.

The best evidence of what was at stake in this election, ironically, comes from the Walker camp. The night before the election, Walker's chief counsel, Brian Hagedorn, sent out an email, obtained by the Milwaukee Journal Sentinel, outlining the dire consequences of a Kloppenburg victory.

"If Justice Prosser loses:

* The Supreme Court will shift from a 4-3 conservative majority to a 4-3 liberal majority.

* Governor Walker's agenda could be stopped in its tracks by this new activist majority.

* Union bosses and their allies will be emboldened and further push to recall the brave Senators who voted for Governor Walker's budget repair bill.

* (Chief Justice) Shirley Abrahamson and her allies will continue to drag down the reputation of the Court, with an additional vote to further push through their radical agenda."

One could argue about who really has the "radical" agenda in Wisconsin, but the gist of Hagedorn's email shouldn't be in dispute. Walker's opponents will be emboldened. And so will anyone else looking for evidence of what can happen when enough people get out and vote.

Walker is now blaming the liberals in Madison for Prosser's loss.

Gov. Scott Walker (R-WI) reacted Wednesday afternoon to the super-close state Supreme Court race -- in which liberal-backed challenger JoAnne Kloppenburg now leads incumbent conservative Justice David Prosser, thanks to popular reaction against Walker's anti-public employee union legislation. Walker's response: Blame it on Madison -- which he said is in a "very different world" from the majority of the state.

WisPolitics reports:

Gov. Scott Walker said this afternoon that the spring election results show there are "two very different worlds in this state."

"You've got a world driven by Madison, and a world driven by everybody else out across the majority of the rest of the state of Wisconsin," Walker said at a press conference in the Capitol.

Of course, the proof is in the numbers that show Prosser's loss was more widespread.

Adding fuel to liberal euphoria, a Democrat also won election to the county executive seat in Milwaukee vacated by Gov. Scott Walker. But perhaps the most important result is the one offering the biggest hint as to what happens next: Kloppenburg decisively trounced Prosser in the district currently represented by Republican state Sen. Dan Kapanke, the first legislator for whom Democrats have accumulated enough signatures to force a recall vote. With one victory -- at least for now -- notched on their belt, Wisconsin's Democrats will be eager for more.

The Republicans claim that they received a mandate from the voters in the last election. However the platform they ran on is not the message that they now claim is bold. The voters in Wisconsin decided to change the course of the Republicans and have embolden the message of the Democrats in this judicial race.

Own a Bank, Make Money

Ellen Brown has "an answer to state budget woes that doesn't need to involve sacrificing workers' rights." She says the state of Wisconsin can prosper if it follows the example of the state of North Dakota. Brown's article explains why Wisconsin Governor Scott Walker needs to switch gears.

As states struggle to meet their budgets, public pensions are on the chopping block, but they needn't be. States can keep their pension funds intact while leveraging them into many times their worth in loans, just as Wall Street banks do. They can do this by forming their own public banks, following the lead of North Dakota - a state that currently has a budget surplus.

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Wisconsin Governor Scott Walker, whose recently proposed bill to gut benefits, wages, and bargaining rights for unionized public workers inspired weeks of protests in Madison, has justified the move as necessary for balancing the state's budget. But is it?

After three weeks of demonstrations in Wisconsin, protesters report no plans to back down. Fourteen Wisconsin Democratic lawmakers—who left the state so that a quorum to vote on the bill could not be reached—said Friday that they are not deterred by threats of possible arrest and of 1,500 layoffs if they don't return to work. President Obama has charged Wisconsin’s Governor Scott Walker with attempting to bust the unions. But Walker’s defense is:

“We're broke. Like nearly every state across the country, we don't have any more money."

Among other concessions, Governor Walker wants to require public employees to pay a portion of the cost of their own pensions. Bemoaning a budget deficit of $3.6 billion, he says the state is too broke to afford all these benefits.

Broke Unless You Count the $67 Billion Pension Fund ...

That's what he says, but according to Wisconsin's 2010 CAFR (Comprehensive Annual Financial Report), the state has $67 billion in pension and other employee benefit trust funds, invested mainly in stocks and debt securities drawing a modest return.

A recent study by the PEW Center for the States showed that Wisconsin's pension fund is almost fully funded, meaning it can meet its commitments for years to come without drawing on outside sources. It requires a contribution of only $645 million annually to meet pension payouts. Zach Carter, writing in the Huffington Post, notes that the pension program could save another $195 million annually just by cutting out its Wall Street investment managers and managing the funds in-house.

The governor is evidently eying the state's lucrative pension fund, not because the state cannot afford the pension program, but as a source of revenue for programs that are not fully funded. This tactic, however, is not going down well with state employees.

Fortunately, there is another alternative. Wisconsin could draw down the fund by the small amount needed to meet pension obligations, and put the bulk of the money to work creating jobs, helping local businesses, and increasing tax revenues for the state. It could do this by forming its own bank, following the lead of North Dakota, the only state to have its own bank - and the only state to escape the credit crisis.

This could be done without spending the pension fund money or lending it. The funds would just be shifted from one form of investment to another (equity in a bank). When a bank makes a loan, neither the bank's own capital nor its customers' demand deposits are actually lent to borrowers. As observed on the Dallas Federal Reserve's website, "Banks actually create money when they lend it." They simply extend accounting-entry bank credit, which is extinguished when the loan is repaid. Creating this sort of credit-money is a privilege available only to banks, but states can tap into that privilege by owning a bank.

How North Dakota Escaped the Credit Crunch

Ironically, the only state to have one of these socialist-sounding credit machines is a conservative Republican state. The state-owned Bank of North Dakota (BND) has allowed North Dakota to maintain its economic sovereignty, a conservative states-rights sort of ideal. The BND was established in 1919 in response to a wave of farm foreclosures at the hands of out-of-state Wall Street banks. Today the state not only has no debt, but it recently boasted its largest-ever budget surplus. The BND helps to fund not only local government but local businesses and local banks, by partnering with the banks to provide the funds to support small business lending.

The BND is also a boon to the state treasury. It has a return on equity of 25-26%, and it has contributed over $300 million to the state (its only shareholder) in the past decade - a notable achievement for a state with a population less than one-tenth the size of Los Angeles County. In comparison, California's public pension funds are down more than $100 billion - that's billion with a "b" - or close to half the funds' holdings, following the Wall Street debacle of 2008. It was, in fact, the 2008 bank collapse rather than overpaid public employees that caused the crisis that shrank state revenues and prompted the budget cuts in the first place.

Seven States Are Now Considering Setting Up Public Banks

Faced with federal inaction and growing local budget crises, an increasing number of states are exploring the possibility of setting up their own state-owned banks, following the North Dakota model. On January 11, 2011, a bill to establish a state-owned bank was introduced in the Oregon State legislature; on January 13, a similar bill was introduced in Washington State; on January 20, a bill for a state bank was filed in Massachusetts (following a 2010 bill that had lapsed); and on February 4, a bill was introduced in the Maryland legislature for a feasibility study looking into the possibilities. They join Illinois, Virginia, and Hawaii, which introduced similar bills in 2010, bringing the total number of states with such bills to seven.

If Governor Walker wanted to explore this possibility for his state, he could drop in on the Center for State Innovation (CSI), which is located down the street in his capitol city of Madison, Wisconsin. The CSI has done detailed cost/benefit analyses of the Oregon and Washington state bank initiatives, which show substantial projected benefits based on the BND precedent. See reports here and here.

For Washington State, with an economy not much larger than Wisconsin's, the CSI report estimates that after an initial startup period, establishing a state-owned bank would create new or retained jobs of between 7,400 and 10,700 a year at small businesses alone, while at the same time returning a profit to the state.

A Bank of Wisconsin Could Generate "Bank Credit" Many Times the Size of the Budget Deficit

Economists looking at the CSI reports have called their conclusions conservative. The CSI made its projections without relying on state pension funds for bank capital, although it acknowledged that this could be a potential source of capitalization.

If the Bank of Wisconsin were to use state pension funds, it could have a capitalization of more than $57 billion – nearly as large as that of Goldman Sachs. At an 8% capital requirement, $8 in capital can support $100 in loans, or a potential lending capacity of over $500 billion. The bank would need deposits to clear the checks, but the credit-generating potential could still be huge.

Banks can create all the bank credit they want, limited only by (a) the availability of creditworthy borrowers, (b) the lending limits imposed by bank capital requirements, and (c) the availability of "liquidity" to clear outgoing checks. Liquidity can be acquired either from the deposits of the bank's own customers or by borrowing from other banks or the money market. If borrowed, the cost of funds is a factor; but at today's very low Fed funds rate of 0.2%, that cost is minimal. Again, however, only banks can tap into these very low rates. States are reduced to borrowing at about 5% - unless they own their own banks; or, better yet, unless they are banks. The BND is set up as "North Dakota doing business as the Bank of North Dakota."

That means that technically, all of North Dakota's assets are the assets of the bank. The BND also has its deposit needs covered. It has a massive, captive deposit base, since all of the state's revenues are deposited in the bank by law. The bank also takes other deposits, but the bulk of its deposits are government funds. The BND is careful not to compete with local banks for consumer deposits, which account for less than 2% of the total. The BND reports that it has deposits of $2.7 billion and outstanding loans of $2.6 billion. With a population of 647,000, that works out to about $4,000 per capita in deposits, backing roughly the same amount in loans.

Wisconsin has a population that is nine times the size of North Dakota's. Other factors being equal, Wisconsin might be able to amass over $24 billion in deposits and generate an equivalent sum in loans – over six times the deficit complained of by the state's governor. That lending capacity could be used for many purposes, depending on the will of the legislature and state law. Possibilities include (a) partnering with local banks, on the North Dakota model, strengthening their capital bases to allow credit to flow to small businesses and homeowners, where it is sorely needed today; (b) funding infrastructure virtually interest-free (since the state would own the bank and would get back any interest paid out); and (c) refinancing state deficits nearly interest-free.

Why Give Wisconsin's Enormous Credit-Generating Power Away?

The budget woes of Wisconsin and other states were caused, not by overspending on employee benefits, but by a credit crisis on Wall Street. The "cure" is to get credit flowing again in the local economy, and this can be done by using state assets to capitalize state-owned banks.

Against the modest cost of establishing a publicly-owned bank, state legislators need to weigh the much greater costs of the alternatives - slashing essential public services, laying off workers, raising taxes on constituents who are already over-taxed, and selling off public assets. Given the cost of continuing business as usual, states can hardly afford not to consider the public bank option. When state and local governments invest their capital in out-of-state money center banks and deposit their revenues there, they are giving their enormous credit-generating power away to Wall Street.

Governor Scott Walker is at an impasse. He created the impasse. He has refused to negotiate. He has refused to see any vision but his own. He is boxed into his position. It is time for Gov. Walker to take off his blinders and actually make a decision which will benefit the workers and people of Wisconsin. Following the lead of North Dakota isn't a liberal plan. It isn't a conservative plan. It is merely a good plan.

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Ellen Brown wrote this article for YES! Magazine, a national, nonprofit media organization that fuses powerful ideas with practical actions. Ellen is an attorney and the author of eleven books, including "Web of Debt: The Shocking Truth About Our Money System and How We Can Break Free." Her websites are webofdebt.com and ellenbrown.com.