Friday, December 17, 2010

Is Malloy Serious?

How do you know when a politician is serious about what he says? You watch what he does. The assessing requires a careful attention to words measured, as a tailor measures cloth to a pattern, against actions.

Just now, prior to his taking office, most people who write about politics are weighing words and asking themselves important questions concerning Governor-elect Dan Malloy. If campaigns are a theatre of words, holding office is a theatre of action. It will not – because it cannot – be long before Mr. Malloy presents his budget. A budget is not a speech; it is an action plan that will set the future of Connecticut for Mr. Malloy’s first term and beyond, and it is very likely that his budget, after its particulars are finalized by Connecticut’s dominant Democratic legislature, will determine both the fate of Connecticut, now knee deep in red ink, as well as the future of individual legislators. Voters tend to be somewhat impatient with politicians responsible for the failure of states, and Connecticut, by any reasonable measure, is a failing state.

Managing Editor of the Journal Inquirer Chris Powell took the measure of Mr. Malloy in one of his recent columns. “Facing a state budget gap of nearly 20 percent between planned expenditures and likely revenue,” Mr. Powell wrote, “Connecticut state government needs ‘systemic’ changes, Gov.-elect Dan Malloy told a business group breakfast in Hartford this week. What does that mean?

“Does it mean the sort of ‘systemic’ change Connecticut got when the state income tax was enacted in 1991 -- higher taxes and bigger government serving only to diminish Connecticut's quality of life? Probably.”

Mr. Powell wants Mr. Malloy to move Connecticut’s so called “fixed costs” -- “collective bargaining for public employees, binding arbitration of public employee union contracts, public employee pensions, ‘prevailing wage’ requirements for government construction projects” – out of the “fixed” column into the fixable column, because these costs, presently safe from meddling interference from legislators and governors alike, are the most costly costs. Any attempt in the future to cut spending without pruning “fixed costs” necessarily must be an exercise in futility. Bringing such costs into the arena of legislative action would empower the governor and the state legislature to fix such holes in the state’s bucket as its stratospheric pension obligations.

Consider: The pension fund has $9 billion in assets and $21 billion in liabilities, which represents 45% of coverage. But, Mr. Powell writes, “instead of fixing the problem, state government lately has been diverting pension fund contributions and spending them. Fixing the problem -- depositing another $8 billion into the pension fund to reach the actuarial standard of 80 percent coverage -- would consume 42 percent of the current state budget of $19 billion if done in a single year. Even done over four years, a fix would consume 10 percent of the budget.”

Connecticut’s debt, the largest per capita debt in the nation, is so deeply rooted that one might reasonably conclude the state no longer has the luxury of protecting large areas of spending by removing them from ordinary legislative action. The present system of governance, in which huge swaths of spending are designated untouchable as “fixed costs,” is part of the architecture of government-by-special-interests. It is becoming increasingly apparent that professions of special interests are conspiracies against the general interest and the common good. Removing areas of spending from cuts made by elected representatives is a recipe for accelerated spending and tax increases. If 75% of the state’s fixed costs are untouchable, only 25% of state debt may be reduced through spending cuts; or, to put it another way, 75% of increased costs MUST be resolved through tax increases, which is why, come to think of it, spending in Connecticut has increased so dramatically since the institution of the income tax. Last year, the Democratic legislature made the tax more progressive. The Promethian hill we climb, only to have the rock roll down to the bottom once we reach the top, IS the fixed costs structure. Tax increase are permissions to spend; it does not take long for a government that has forbidden itself to cut “fixed costs” to rise to the occasion.

Preparing to attack some of these problems, Mr. Malloy recently addressed two seemingly antagonistic groups. The MetroHartford Alliance is a group devoted to spurring business activity. Hearing Mr. Malloy lament that Connecticut ranks 35th among states in a pro business environment, members of the group no doubt were encouraged to think that the speaker was prepared to offer painful but effective remedial action. The members of the second group, the Working Families Party, a union scheme to elect friendly politicians, were as delighted to hear from a politician they helped to elect to office the soothing message that he was committed to maintain an ever broadening safety that would secure the interests of unionized workers.

No one should doubt Mr. Malloy’s ability to turn heads and hearts with words; in this, he bears a striking resemblance to the nation’s sweet tongued president, Barack Obama, whose political agenda Mr. Malloy enthusiastically embraces. Beyond words lie actions. It is by their actions that political actors will be judged – not by the intent of the actors, but rather by the practical consequences of their actions.
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