Saturday, April 25, 2015

The Republican Alternative Budget

"We cannot continue to put the Band-Aid on the problem and hope when we go to bed at night that next year will be any different. Next year is not different unless we make it different this year." So said House Minority Leader Themis Klarides as state Republicans launched their "Roadmap to Prosperity" alternative budget.

Immediate reactions from leading Democrats in Connecticut’s General Assembly have not been obdurately dismissive.

As a general rule, Democrats prefer long term spending measures and short term spending cuts, the shorter the better. Republicans prefer – or should prefer – exactly the opposite: long terms spending cuts and short term revenue increases, only when they are necessary. The Republican budget is a vast improvement over Governor Dannel Malloy’s defective budget, a step in the right (pun intended) direction.

To judge from its reception among serious Democrats, those who have handled budgets in the past, it’s a serious approach to Connecticut’s chronic malaise. Speaker of the House Brendan Sharkey thanked Republicans and said “This is an extremely challenging budget year, and Republicans deserve credit for sharing their ideas instead of simply sniping from the sidelines.”

The usual Democratic props have, as expected, turned their thumbs down on prosperity. Whether Democratic legislators will treat Republican ideas seriously will be determined almost entirely by political rather than economic considerations. There were no Republican fingerprints on any of Governor Dannel Malloy’s budgets. The first Democratic governor in nearly a quarter century shooed Republicans from the room during his first budget, and the opposition party, rarely fierce in opposition, were loftily ignored in subsequent budgets. This time around may be different.

The state has reached a crisis point. There are, believe it or not, Democrats in the General Assembly who have come to realize that the old bromides don’t work anymore. Ideas have consequences, and so do budgets that rest precariously on faulty ideas. These consequences have now come in front of the curtain and taken their bows.

Connecticut’s job production, suffering under massive tax hikes, has been abysmally low ever since Governor Lowell Weicker graced the state with his income tax. Here’s an idea: Whatever you tax tends to disappear. Many of the state’s revenue producers have either fled the state or are operating on one cylinder. If one thinks crudely of people and businesses as revenue banks, the flight of young entrepreneurial talent to other higher performing states becomes alarming. And none of this is hidden from public view. When people sit down to a Thanksgiving or Christmas dinner, they are able to count the number of young people who have drifted in from other states. In the last four years, Connecticut has lost a net of 76,000 people to domestic migrationaccording to a report in CTMirror. They know Connecticut is leaking revenue producers. True, they are not insensible to the usual political soft sells; but ultimately nutmeggers will be convinced by events, not political prattle. They don’t need graphs and statistics and editorials and political commentary and easily ignored warnings from the Cassandras among us to convince them that SOMETHING IS SERIOUSLY WRONG.

There is a sense in Connecticut that events are in the saddle riding men.  Jobs are not being produced; in many cases, they are disappearing everywhere but in the swollen tributaries of state government. Companies need entrepreneurial capital to produce jobs; this seed capital is drawn off by punishing taxation. Here's an idea: Connecticut has a spending problem, not a revenue problem, and consequently the answer to the state’s malingering malaise is to cut spending – to adopt long term, permanent spending cuts. To offer one example among many: Mr. Malloy’s transportation repair kit – a thirty year, $100 billion project – ties the hands of governors and legislators thirty years out; it moves dollars into a spending lockbox precisely at a time when spending has produced  a brood of serious, intractable problems, most of which can be traced to political timidity.

A wiser course might be to require the legislature to review all “committed spending,” widely regarded as untouchable, every fiscal year for the next thirty years, on the understanding that commitments should be adjusted to accommodate reality. To be sure, Republicans do not make such suggestions in their current alternative budget. Had they done so, Mr. Sharkey might not have been quite so liberal with his complements. But at some point – the time is now -- the Democratic dominated legislature and the Democratic governor must seriously attack spending.

And attacking spending is a politically punishing business, which is why most politicians avoid it whenever possible. The Republican alternative budget, while attentive to real needs, trims spending modestly. Even so, the trimming has set off alarm bells among the usual culprits, swooning union leaders and Connecticut’s leftist chorale. Executive director of the Connecticut Citizen Action Group Tom Swan is said to be recovering from a nasty fall incurred when he first glanced at the GOP alternative budget, but smelling salts revived Mr. Swan,  whose recent attention has been focused on persuading progressive Democratic legislators to mark up a bill that would force Walmart to offer a living wage to its workers. Jonathan Pelto, Mr. Malloy’s bete noir, is thought to be preparing a devastating response to the Republican Party’s War on indigent and oppressed teachers.

Even while submitting his out of balance budget to the General Assembly, Mr. Malloy airily dismissed it. His budget, Mr. Malloy said, was balanced – not true – and the General Assembly would do with it whatever it wished. Democratic leaders have said some Republican ideas have been incorporated into their own budget. Soon we will know how many Republican spending cut proposals have been incorporated in the Democratic budget plan.  When the General Assembly has finished its revisions, the budget will be returned to Mr. Malloy’s desk for further emendation before receiving his final stamp of approval.
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