Sunday, December 21, 2014

The Shape Of Things To Come

"The esthete stands in the same relation to beauty as the pornographer stands to love, and the politician stands to life” – Karl Kraus.

It’s a great puzzle for those who think seriously about getting and spending. During his second winning campaign for governor, Dannel Malloy took tax increases – but not increases in borrowing, the last refuge of spending scoundrels -- off the table. Echoing George H.W. Bush’s boast at the 1988 Republican National Convention, Mr. Malloy invited Connecticut voters in so many words to read his lips: NO NEW TAXES.

And yet, even Mr. Malloy’s own Office of Policy Management guru, Ben Barnes, has told us that we shall have to get used to sluggish tax receipts, at least for the foreseeable future. Mr. Malloy has pledged to hold Connecticut’s Municipalities harmless, and so it will be difficult for him to pass the state’s budget woes to towns by reducing their revenue allotments. He has pledged not to renegotiate state contracts; no spending cuts there. He plans to increase or maintain educational spending at its current levels. For progressives – and we are all progressives now – education is a near sacred fetish. Nothing must be done to deprive even those who are ill prepared for college of an increasingly expensive education. No savings there.

On the matter of spending cuts, Mr. Malloy’s program is beginning to resemble the much criticized program offered by his Republican opponent during the recently concluded election. Mr. Foley, some may recall, was mercilessly battered about the ears by most editorial boards in the state because he had promised during his campaign not to increase taxes, not to renegotiate state contracts, not to lay off state workers, a series of “nots” that suggested Mr. Foley was not seriously interested in manfully confronting Connecticut’s very serious spending problems.

Mr. Barnes may be prudent in anticipating an ongoing “stagflation” in Connecticut. Revenue streams are not what they were when Connecticut’s economy was robust. State spending increased rapidly, tripling in the space of three governors, following the imposition of the Lowell P. Weicker Jr. income tax, which was followed by disappearing surpluses that trailed off into deficits, which was followed by the Dannel Malloy tax increase, the largest in state history. Connecticut taxpayers, whose assets have been depleted by a near depression followed by pocket-emptying tax increases, are now looking down the barrel of a four year deficit amounting to, depending upon whose accounting principles are applied, about $4 billion. State pension and other liabilities amount to about $65 billion, not the rosiest of dawns.  

Gas tax receipts, to take but one example, are bound to go down because the price of oil has gone down. The price of energy is included in the costs of all products and services in the United States, not merely at the gas pump. As much as it may please consumers that some energy prices have dipped, the news cannot be glad tidings for governors and others who need high energy prices to maintain a level of spending that does not move them outside their comfort zones. The worldwide reduction in oil prices very quickly made a sourpuss of the usually affable President of Russia, Vladimir Putin, because the Russian economy is heavily dependent on its chief European export. In Moscow just now, anxious buyers are emptying the shelves in anticipation of Russia’s coming monetary crisis. Things are not quite so bad in Hartford’s Capitol, where politicians work their wonders.

In Connecticut, we are told, we should count our blessings. We have Mr. Malloy’s word for it  that he has “righted the ship,” that he is “working on a Big Vision,” that tax policy will in the second Malloy administration “be driven by what we need to do to have a great state that we all desire,” that as governor he was imbued with the rare courage to “do what I felt was right, even if it would cost me an election, which it did not,” that we must “make sure we have the right projects to be funded to drive our investments.” If these bumper sticker bites should strike anyone as stale campaign left-overs, it is because that is exactly what they are.

The economic climate in Connecticut will not improve because Mr. Malloy, the state’s investor-in-chief, has decided to take a tax dollar from Citizen Smith and give it, as an “investment,” to the CEO of a large international Connecticut based company who has decided to play Mr. Malloy’s crony capitalist monopoly game. Companies that accept handouts from Mr. Malloy are, almost by definition, "risky investments." If they did NOT need the handout, they would be "prudent investments.”

The great Austrian writer and social critic Karl Kraus acerbically defined psychoanalysis as “the disease it purports to cure.” It is a definition that might more appropriately be applied to Mr. Malloy’s crony capitalist schemes, which cannot be financed without surpluses created by over taxation or excessive borrowing at a time when Connecticut’s economy is stressed by high taxes and burdensome regulations, both chronic problems neither of which will engage the interest of Mr. Malloy during his next term.


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