Thursday, July 30, 2009

Hail and Farewell

The words “tax increase" were still dew on the lips of Gov. Jodi Rell when Don Williams, president pro tem of Connecticut’s Democratic dominated legislature, began to twist the knife in her ribs.

One paper wrote that Williams had “hailed the development.”

Said Williams, the development “could mark a watershed moment in the budget crisis that has gripped Connecticut for more than a year. Fiscal reality has finally caught up with Gov. Rell — the same fiscal reality she should have dealt with in January, not July."

"For six months Gov. Rell has led the legislature and the public on a wild goose chase — ignoring deficit projections and avoiding the toughest decisions. It is unfortunate that it took the consensus revenue forecasting law to get the governor to finally address fiscal reality."

A "watershed" moment for Williams is one that allows him to continue to stroke and pet his favored constituencies without having to make "hard" budget cutting decisions.

Connecticut has seen this mating dance between cutters and spenders ever since the sun rose on an income tax that has tripled in the course of three governors. One of them, Lowell Weicker, has just finished lamenting to a reporter that the fallen nature of mankind is responsible for the tripling.

Democrats, reaching for the last jar of peanut butter in a nearly empty pantry – a progressive tax on the diminishing rich – call for tax increase to meet ever growing budget needs. A need, conservative columnist George Will reminds us, is a want that is more than 12 hours old. The Republican governor protests. There follows a set-to in the newspapers. Everyone’s hackles are got up. The media calls for “pragmatic” solutions, a little tax increase here, a little spending nip there. Decisions on budgets are absurdly prolonged. The fiscal year ends without a final decision of the budget. The two camps theatrically shake their fists at each other across the ideological divide. They huddle together at the state capitol’s former smoke filled rooms or in the governor’s residence. Suddenly, there is light; a rapprochement is arrived at. A gesture is made towards budget cutting. Taxes are increased. The chairs on the Titanic are shifted around. Everyone is very pleased with everyone. Kumbaya is sung. The curtain is rung down. Editorials are written praising all for their sagacity.

This year the Democratic Party has decided to cut spending by eliminating the name of the Department of Motor Vehicles; no jobs will be lost. The governor and leading legislative Democrats, after months of fist shaking, have agreed to tax increases.

Having gone as far as she could in applying her dictum – no tax increases before every effort is made to cut spending – Rell has succumbed to Democratic blandishments and the two warring parties are moving towards a “compromise.” With a Democratic majority in the legislature poised to override her vetoes, how could the governor do otherwise? Really, the lady is quite helpless.

Initially Democrats wanted an obscene and destructive 30% increase in corporation taxes; after caucusing, Democrats reduced the rate to 15% over the next three years. Rell has offered 10% to be paid by companies for three years from 2009 through 2011. Quite apart from the destructive impact corporation taxes have on competitive corporations, no company has ever paid a corporation tax from their profits; corporations collect taxes at the point of sale and pass on the tax to consumers.

Sin taxes on liquor and cigarettes will rise.

The Democrats want $1.8 billion in taxes over the next two years; Rell would raise taxes by $391 million. Williams is still hotly agitating for a tax on mini-millionaires.

We’ve seen this punch and Judy show unfold in the same manner countless times. Republican Governors come and go; legislatures come and go. But the show never varies, and apparently people never tire of it. The audience leaves entertained, but poorer than they were when the curtain was rung up – because, shelving all the rhetoric, they will be paying for the show.

The bottom line is this: The state is in dire financial straights, with none to pilot it out of danger. It needs a new script, and it will never get one from the old actors.
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