Thursday, January 13, 2011

Taxes And Spending: How Much?

The most important question to be decided when Gov. Dannel Malloy presents his budget to the legislature in February is: How much? What will the distribution of spending and tax cuts be like?

Mr. Malloy has said often enough, during and after his campaign, that the budget nut – a $3.5 million deficit in each of the next three years -- will be hard to crack. Both spending cuts, generally referred to by Democrats as “painful,” and tax increases, possibly less painful for a Democratic caucus that under the leadership of Speaker of the House Chris Donovan and President of the Senate Don Williams has tended to trim its politics to union interests, are in the offing.

Republicans in the legislature certainly will offer a stiff resistance to tax increases, which are regarded in GOP quarters and many places in the world outside Connecticut as business disincentives. But Mr. Malloy, Mr. Donovan and Mr. Williams may well ask in this regard: How many battalions do Republicans have? In Connecticut, a state that did not follow in the last election a pattern that threw the U.S. House and many state legislatures and gubernatorial offices into Republican hands, the GOP lacks the necessary fire power in the legislature to offer more than polite objections.

Such has been the case with Connecticut’s GOP even in days of yore when Republicans ruled the gubernatorial roost. Republican governors have not often wielded their veto pens in the interests of their party or their dwindling legislative caucus.

So far, the question the Malloy administration has assiduously avoided is: What percentage of tax increases to spending cuts would be acceptable to the Democratic dominated legislature and the state’s Democratic governor? These matters are usually settled, before the budget has been set in concrete, in meetings held between the chief executive and caucus leaders in the legislature that are closed to the public, the infamous “smoke filled back rooms” of muckraking journalists.

A like percentage escaped U.S. Sen. Joe Lieberman as he was being grilled by Dennis House of WFSB’s “Face The State.” House’s rapid fire interrogatories often do not allow his guests time to mull over carefully crafted non-answers, and the truth sometimes comes tumbling out them. Such was the case when House asked Mr. Lieberman “What will the new senate do to cut back on some of the spending?

Citing President Barack Obama’s National Commission On Fiscal Responsibility And Reform, the senator then unscrolled a spiel:

“We’re going to have to methodically cut back spending, and we’re going to have to raise some taxes too… the bipartisan commission came out with a proposal, not adopted by enough members but by a majority, that said we can get ourselves back in balance by a combination of spending cuts and tax increases. Three quarters of their recommendations were spending cuts, one quarter tax increases. That’s probably a good balance… Frankly, we’re going to have to ask more of everybody, if we’re going to get our country back on track and paying our bills. That’s not only the responsible thing to do to protect out kids from an unbelievable tax burden. But it’s the best thing to do for our economy, because it will restore confidence in our markets. I think it will keep interest rates low, and it will allow for a lot of investments in business and job creation. To me, the three goals we [should pursue] are: Get the country moving again, deal with the long term debt of our country, and make America energy independent again.”
The reasonable goals proposed by Mr. Lieberman for the nation are the same as those sketched in rude outline by Mr. Malloy and former ambassador Tom Foley in their recently concluded gubernatorial campaign. Is there a legislator in the General Assembly who would decline to support a workable plan designed to get Connecticut moving again, expunge its budget deficit and pension liabilities, and make the state energy independent?

The coming legislative jihad will be all about the proportion of spending cuts to tax increases. It is a delicate question how the proportion mentioned by Mr. Lieberman in his discussion with Mr. House -- one quarter tax increases to three quarters spending cuts -- will go down the gullets of legislators who have spend a good part of their careers genuflecting in the direction of minimal and temporary spending cuts while promoting permanent progressive increases in the state’s ever burgeoning income tax.

Will they recall George Will’s quip about Governor of California Arnold Schwarzenegger -- that Mr. Schwarzenegger was “the best governor that states contiguous to California ever had.”

Governors and mayors in states contiguous to Illinois, the home state of President Barack Obama, are slavering over the proportions of spending cuts to tax increases proposed by the lame duck Illinois legislature: 66 percent tax increases to 34 percent spending cuts. The scheduled tax increases are supposed to be temporary, a prospect sure to raise a chuckle in states continuous to Illinois, whose mayors and governors look forward to pillaging the city of its workers and businesses.

New Jersey’s governor is indisposed to any tax increases, and Governor Andrew Cuomo of New York  is unambiguous on the matter of tax increases: “I understand the semantics argument. I say no new taxes, period." Mr. Cuomo’s vision for New York’s future involves limiting spending growth to the rate of inflation, consolidating departments and placing a cap on property taxes.

The question before the house is: After Mr. Malloy’s budget is passed by the Democratic controlled legislature, will he be the favorite governor of states contiguous to Connecticut?
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