Thursday, October 20, 2005

Gubernatorial Race: It's the Economy, Stupid

Jodi Rell teared up during her announcement that she was making herself available to run again as governor. Rell’s stratospheric popularity quotient humbled her, the governor said, and she wanted everyone to know she was serious about de-horning the devil of corruption that has plagued Connecticut ever since most of us were knee high to toadstools.

Sentimentalism is the enemy of clear thought.

There is little doubt that Rell has stolen the corruption issue from the clenched teeth of the Democrats. She did this by bowing to liberals on the issue of public financing of campaigns, much to the chagrin of her fellow Republicans, and then attempting to force Democrats to swallow unpalatable conditions, such porcupines as the abolition of ad-books, guaranteed to pierce Democratic throats with painful quills, and a prohibition preventing lobbyists and contractors doing business with the state from contributing to campaigns.

But the edge Republicans have had in the past over the loyal opposition – and here, unfortunately, one must discount President George Bush – is that the GOP has had a reputation as a spending watchdog. Here again, unfortunately, one must discount former Governor John Rowland, a chief executive never averse to using the public perception as a bargaining chip with Democrats, then and now the dominant party in control of the legislature.

Rowland liked to portray himself as a firewall that prevented Democrats from spending recklessly. But the firewall was paper thin. Rowland favored tax credits, revocable at the whim of governors and legislators, over permanent cuts. The benefit of a permanent tax cut is that it produces a temporary deficit, which helps to dampen the ardor of those economically reckless politicians who prefer, by acceding to the wishes of powerful special interest groups, to spend themselves into popularity. Deficits, like nagging mothers, sometimes are successful in controlling spending – unless, of course, one is Bush or Rowland. Serious attempts at budget cutting create an economic climate that anchor Connecticut businesses to the spot and lure promising business prospects from other states, conditions that, over the long run, increase tax revenues.

The problem for Republicans is that the perception of the state GOP as being bullish on tax cuts may be changing, and there are Democrats in the field anxious to exploit any Achilles’ heal Republicans may have.

In the first serious campaign ad of the season, designed by media consultants who worked on President Clinton’s 1996 re-election campaign, New Haven Mayor John DeStefano has introduced himself to the voting public as a candidate capable of lifting the state out of its economic doldrums.

“Fifty states,” the ad intones, “but Connecticut is last in job growth… We can do better. John DeStefano. The son of a police officer. Devoted husband and father. As New Haven mayor, new jobs created, crime cut over 40 percent, drop-out rate cut over 40 percent.”

The purpose of early ads is to give shape and direction to campaigns. The gauntlet has been thrown down: It’s the economy, stupid.

But what can it mean to say that Connecticut rates last in job creation, and what are the prescriptive remedies?

Entreprenurial states in the South have stolen both jobs and entrepreneurs from anemic Northern states because the cost of doing business is cheaper there – which means that the Northeast may recover some of it lost advantage by reducing the cost of business, rather than by bribing businesses, usually by means of tax forgiveness, to stay in an area that punishes economic growth.

Connecticut in the process of paying a profitable insurance company that reported $4.2 billion in profits for the first half of this year oodles of cash, in the form of tax deferments, to move from Hartford to East Hartford, a shameful form of bribery condemned by Chris Powell of the Journal Inquirer as a not so polite form of “extortion.”

Business tax deferments of this kind and tax rebates do not improve economies: They make beggars of us all.

A serious proposal to raise Connecticut from last place in job creation would cut spending and reduce taxes for all businesses and all tax payers, a message that in the past has been associated with the Republican Party.

But that message has been distorted by the last two governors, and it remains an open question whether any gubernatorial candidate whose hats now are in the ring is serious about making Connecticut’s economy competitive. The fine lines on the contender’s economic programs have not yet been inked in.
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