Tuesday, March 10, 2015

The Progressive Connection, Malloy and His General Assembly

Legislators – and, of course, Governor Dannel Malloy – are staring down the barrels of a double gauge biennial deficit: $1.3 billion in 2015-16, and $1.4 billion in 2016-17. Mr. Malloy’s current budget increases the revenue stream by about $900 million through the usual means: the elimination of exemptions, borrowing and increasing entrepreneurial taxes.

A flawed spending cap nudges legislators in the direction of spending cuts, never popular among big-spending progressives, or, more likely, tax increases, which are increasingly unpopular among flat-lining taxpayers; those who consume taxes, the permanent government, naturally are not averse to tax increases. It’s easy to give candy to a baby, difficult to snatch it away.

The Malloy administration now finds itself crushed between a rock, potential spending cuts, and a hard place, potential tax increases.

The same crush in 1991 led to an income tax, the second highest tax increase in state history. Mounting deficits in 2011 led inexorably to the highest tax increase in Connecticut history in the first year of the Malloy administration. The usual progressive template favors long term spending – Mr. Malloy’s $100 billion, thirty year infrastructure repair program, for instance – particularly spending proposals that bind succeeding governors to long-term irreversible spending programs, and short-term savings that easily can be overridden by either Mr. Malloy or his progressive successors. The idea is to lock in spending for long stretches of time while leaving big spending progressives free to reverse any measures that may deplete revenue. From the progressives point of view, the more spending that can be moved from the touchable to the untouchable column on the budget ledger the better.

Everyone, especially editorial writers and commentators who have been in business for the past few decades, knows the score and is familiar with how the game is played. In a one party state, the game moves smoothly through the innings and the end is foreordained: Taxes increase, spending increases, and all the right people -- i.e. all the left people -- are satisfied.

This year, Mr. Malloy left on the doorstep of the General Assembly a budget that was out of balance, according to the calculations of number crunchers in his own Administration, all Democrats. The cuts Mr. Malloy managed to make lashed the backs of the poorest of the poor and the neediest of the needy. And these cuts have occasioned political speculation among politicians in both parties and what might be called the progressive wing among Connecticut commentators. After delivering his out-of-balance budget to majority leaders in the state Democratic dominated General Assembly, Connecticut’s banged governor -- “Here I sit,” Mr. Malloy agonized, “I get banged up because we’re not making cuts. I get banged up because we’re not raising taxes. I get banged up because we’re raising taxes. I understand, it’s the job I ran for” -- took off for a richly deserved vacation in Puerto Rico, certain that Democratic leaders in the General Assembly would be able to straighten out the bends in his crooked budget without self-destructing.

Here is what Democratic progressives in the General Assembly are discussing among themselves: Dare we disturb the universe? Dare we, once again, raise taxes? And if we resort to tax increases, possibly the last straw that may break the backs of Connecticut’s overburdened, much regulated Middle Class taxpayers, will the governor veto our tax increases – AS HE SUGGESTED HE MIGHT when he ruled out tax increases during his reelection campaign? Is the governor’s laconic response to reporters who inconveniently pointed out that his submitted budget was out of balance by about $100 million – “We’ve gotten it off my desk. It’s now up to the legislature” – an indication that Mr. Malloy is serious, during his second round as governor, in cutting expenses, thereby  opening the door to future prosperity and relieving future generations of the debt burdens we have passed along to them in a future blasted by our inability to do the right thing for posterity?

There is so little unequivocal meaning in what has been said regarding budgets thus far that no one may safely say tax increases are off the table. Mr. Malloy has said both and at the same time, “We’re not calling for raising new taxes or rates,” and “It’s now up to the legislature.”

Consulting history – no state in the union, deeply in debt, has ever spent its way to solvency – as well as recent Connecticut history – we have taxed the patience and resources of taxpayers by two massive tax levies – it does not take a priestess of the oracle of Delphi to read the signs of the times and conclude that more crippling tax increases may be in the offing, which will lead to more debt, more political posturing and a further delay in the state’s recovery from a protracted recession brought about by cowardly political decisions made by cowardly politicians. 

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