Monday, May 18, 2015

Looney to Connecticut’s Middle Class: Your Money Or Your Life

Politicians, like most people, tend to repeat successful behaviors long after they have ceased to be successful. In the political arena, one must carefully define “success.”

It ought to be obvious by now that what is good for the political goose is not always good for the non-political gander. High taxes, for instance, are good for progressive politicians, because boosting taxes rather than cutting spending does not generally bruise the tender relations between the progressive politician and his politically active supporters, who most often fall on the tax consuming side of the political barricades; state worker unions, for instance, flourish under the care of progressive politicians.

People from whom taxes are collected, on the other hand, tend to be antagonistic towards tax demanding politicians, because taxes are drawn from their own wells: Every dollar taken from Peter to pay to Paul leaves Peter poorer, less independent, less able to tend responsibly to his own affairs and, in the end, less able to support Paul.

Such are the positive and negative poles in politics. The trick always is to wend one’s way through the political poles without being struck by a fatal electrical charge, the bolt of lightning that has reduced to cinders the careers of many a clever politician.

Here in Connecticut – a state that has for many years lived off the fat of the land – times have changed, and not for the better. Measured by almost every important datum, Connecticut has been for some time slipping down the slippery slope.

It should surprise no one that Connecticut taxes are the fourth highest in the nation; this at a time when businesses are moving to states where tax piranhas are less vicious. Governor Lowell Weicker, an expatriate from the Republican Party, hung an income tax albatross around Connecticut’s neck after several non-income tax balanced budgets were presented to him by a cautious, income tax averse General Assembly. The income tax was not only a large tax bump; it was a signal to wealth-producing businesses outside Connecticut to avoid moving to a state that had shown itself incapable of attacking rampant spending.

Succeeding governors and legislators took full advantage of the license to spend provided by the income tax, which was good for tax consumers and bad for tax suppliers. Politicians in Connecticut, both Republican and Democrat, have successfully raised taxes because thus far the political penalty attached to a bump in taxes has been less ruinous to them politically than the only economically viable alternative – reducing long term spending.

Following in Mr. Weicker’s footsteps, Governor Dannel Malloy, during his first term in office, imposed on Connecticut the largest tax increase in state history. The Democratic dominated tax writing committee this term has produced its own tax larded, spending friendly budget. The signals are unambiguous: Connecticut has now demonstrated that it CANNOT put its economic house through permanent spending reductions. And the whole world is watching.

Progressives in the General Assembly have said that permanent reductions in spending are impossible. It is impossible, for instance, to permanently reduce pension expenditures by raising the retirement age for state workers two years, because any effective measure that might successfully reduce the state’s $44 billion pension liability afflicting the state's two largest pension systems and its two retiree health benefit programs for teachers and state workers would require the co-operation of unions that are, naturally, opposed to the surrender of any portion of their outsized benefits. The retirement age for state workers is determined by years of service: Normal retirement occurs at age 60 when vesting service is 25 years; if vesting service is at least 10 but less than 25 years, state workers may retire at age 62; if vesting service is five years, state workers may retire at age 70.

“Retired Connecticut state employees received the highest annual pensions in the country in 2011, despite contributing less out of their paychecks than the national average,” the New London Day reported more than a year ago. “That meant the state's pension system was the second-most underfunded in the United States, in worse shape than every other state's except Illinois'.”

For progressives, any attempt to change the retirement schedule of state employees would necessarily incur the wrath of their political supporters. As the state becomes more and more committed to ruinous progressive ideas, politics more and more becomes the art of the impossible. This year, progressives in the General Assembly have made reductions in pensions impossible by removing pension expenditures from the state’s spending cap.

With the blessing of Senate President Pro Tem Martin Looney, the Democrat dominated budget writing committee this year has expanded Connecticut’s sales tax, making the tax less friendly to Connecticut’s struggling Middle Class. Mr. Looney proposes to share a portion of the increased sales taxes with municipalities that have been far more successful in controlling spending than Mr. Looney’s progressives in the General Assembly. Told that the new municipal revenues – to which the state will no doubt attach strings – might spur more municipal spending, Mr. Looney responded, “We are looking at trying to do something that is transformative.” He sought to dampen fears of “over opulent” municipal spending by noting that such charges were “knee jerk reactions” to the proposed sales tax increase.

Mr. Looney insists that the new municipal funds – drawn from a broader based sales tax hurtful to Connecticut’s overtaxed, struggling Middle Class – will not be squandered by spendthrift municipalities because “spending controls,” including a cap on municipal car taxes, will be a part of the exchange; this from a progressive state government that only yesterday, so it seems, avoided reducing pension debt and made a deficit disappear by removing pension liabilities from the state's constitutional cap.

Mr. Looney’s scheme may be helpful to progressive municipal politicians, but even some moderate Democrats are beginning to wonder whether progressivism in the state is good for Connecticut’s economy and its besieged Middle Class – not to mention their own political futures.

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