Skip to main content

Connecticut, the Canary in the National Mineshaft


Such are the parallels between the Malloy and Obama administrations that it might almost be said President Barack Obama is now replicating on a national scale The Malloy Way, with one important exception.

When Governor Dannel Malloy first came into office, Connecticut was facing a daunting deficit of about $3 billion in a biennial budget of about $20 billion. Hoisting the flag of “shared sacrifice,” Mr. Malloy raised taxes, imposing on Connecticut the largest tax increase in state history. Mr. Obama’s most recent gambit is to raise taxes immediately on the country’s malefactors of great wealth in a special session of the congress, saving until tomorrow – “which creeps in this petty pace to the last annals of recorded time” -- any strategy to reduce spending.  

A newly elected Governor Malloy departed sharply from ardent progressives in his party who insisted that the bulk of the tax increases should come mostly from the state’s millionaires; instead of acceding to what budget watchers in Connecticut might call the Donovan plan, Malloy increased tax revenue from enterprises that previously has escaped the tax man. The Malloy tax was broad based, not narrowly contrived.

Mr. Donovan, the Speaker of the House, later ran for the U.S. House of Representatives and was chosen by the Democratic Party as its nominee for the 5th District. Mr. Donovan’s campaign was driven into the ground by an FBI investigation in the course of which his campaign finance manager and others were arrested. Had Mr. Donovan prevailed in a general election against Republican nominee Andrew Roraback, the Speaker would have entered the U.S. Congress just in time to vote affirmatively for national tax increases on millionaires. He missed the joyous moment by a hair.

We see here a notable difference between Mr. Obama, a perpetual campaigner, and Malloy, a perpetual campaigner. Obama’s tax on millionaires – actually, quarter-millionaires – is little more than a campaign device; the millionaire tax, which will become operative if previous across-the-board Bush tax cuts are adjusted to eliminate tax cuts on quarter-millionaires, will not generate enough revenue to pay for Obama’s new programs, unless it is broadened over time to include a revocation of middle class tax cuts.

But in other respects, Mr. Obama and Mr. Malloy have adopted similar political strategies in addressing deficits.

Mr. Malloy is now facing yet another deficit following his gargantuan tax increase, and the choices available to him to discharge the “shortfall” of his first budget and the coming deficit of his second budget – about $2 billion – are limited, because salary and benefit increases for unionized state workers in future years had been written into previous binding contracts he negotiated with state unions. Mr. Malloy then cannot expect savings from that quarter.

In addition, Mr. Malloy has vowed not to raise taxes to fill what he calls a “shortfall” of about $395 million in his last budget. And as soon as he turns the corner, following an upcoming special session on the “shortfall” in his current budget, Mr. Malloy will find himself face to face with a far larger deficit in the new budget season.

These deficits, the governor and other leading Democrats insist, have been caused by the national recession, the growth of Medicaid spending, the European double-dip recession – all of which, it should be noted, are beyond the reach of solutions that might be adopted by state government, which is a rather complex way of rhetorically disowning responsibility for the deficit. Mr. Obama is masterfully adept at escaping the predictable consequences of his policy victories.

There is no George Bush in Connecticut to serve as an convenient scapegoat but, in the absence of a Republican who may usefully be vilified, a host of sub-demons -- the national recession, the international double-dip recession, which has hit France in the breadbasket, and other convenient agents of Connecticut’s destruction -- will do just as well.

It falls to men and women of good intent to point out that because deficits are caused primarily by exuberant spending, the only curative solution to repetitive deficits is spending reform -- not just temporary cuts in spending, but rather a vigorous effort to identify and remove what one might justly call the many drivers of spending escalation in Connecticut.

Here we tread dangerously on the electrically infused third rail of Connecticut politics. A real constitutional cap on spending tied to increases in the state domestic product or an end to binding arbitration just might reduce the rate of spending increase in annual budgets, about 7 percent per year since the Weicker income tax was levied in 1991. Putting in mothballs chronically failing public schools and replacing entire administrations and teachers with more competent and energized staffs, would reduce labor expenses and provide an incalculable educational benefit. A recent 2011 proficiency study shows that magnet schools in Hartford vastly outperform Hartford public schools: “The gap in 2011 between magnet school performance and neighborhood school performance stands at 26.2 points at Proficient, having widened by just over 7 points in the past four years.”

Solutions that will reposition Connecticut as an economic and educational powerhouse relative to other states – including business tax reductions and regulatory reform – are at hand. It is the courage of useful convictions that is wanting.

Comments

Anonymous said…
Reading this article reminded me of the 82% loss in manufacturing we suffered here in southeastern Ct. in the late 1990's.

Yeah back then the Democrats and The New London Day Newspaper called it "outsourcing" to foreign countries!

Foreign countries like Rhode Island, New York, Virgina, and Massachusetts?????

Democrats = Socialists

Popular posts from this blog

The Blumenthal Burisma Connection

Steve Hilton , a Fox News commentator who over the weekend had connected some Burisma corruption dots, had this to say about Connecticut U.S. Senator Dick Blumenthal’s association with the tangled knot of corruption in Ukraine: “We cross-referenced the Senate co-sponsors of Ed Markey's Ukraine gas bill with the list of Democrats whom Burisma lobbyist, David Leiter, routinely gave money to and found another one -- one of the most sanctimonious of them all, actually -- Sen. Richard Blumenthal."

Powell, the JI, And Economic literacy

Powell, Pesci Substack The Journal Inquirer (JI), one of the last independent newspapers in Connecticut, is now a part of the Hearst Media chain. Hearst has been growing by leaps and bounds in the state during the last decade. At the same time, many newspapers in Connecticut have shrunk in size, the result, some people seem to think, of ad revenue smaller newspapers have lost to internet sites and a declining newspaper reading public. Surviving papers are now seeking to recover the lost revenue by erecting “pay walls.” Like most besieged businesses, newspapers also are attempting to recoup lost revenue through staff reductions, reductions in the size of the product – both candy bars and newspapers are much smaller than they had been in the past – and sell-offs to larger chains that operate according to the social Darwinian principles of monopolistic “red in tooth and claw” giant corporations. The first principle of the successful mega-firm is: Buy out your predator before he swallows

Down The Rabbit Hole, A Book Review

Down the Rabbit Hole How the Culture of Corrections Encourages Crime by Brent McCall & Michael Liebowitz Available at Amazon Price: $12.95/softcover, 337 pages   “ Down the Rabbit Hole: How the Culture of Corrections Encourages Crime ,” a penological eye-opener, is written by two Connecticut prisoners, Brent McCall and Michael Liebowitz. Their book is an analytical work, not merely a page-turner prison drama, and it provides serious answers to the question: Why is reoffending a more likely outcome than rehabilitation in the wake of a prison sentence? The multiple answers to this central question are not at all obvious. Before picking up the book, the reader would be well advised to shed his preconceptions and also slough off the highly misleading claims of prison officials concerning the efficacy of programs developed by dusty old experts who have never had an honest discussion with a real convict. Some of the experts are more convincing cons than the cons, p