Sunday, June 21, 2015

Connecticut's Misadventures In The Investment Trade

Progressives have for some time been in the habit of calling tax receipts “investments.” Governor Dannel Malloy, who has proposed a thirty year, one hundred billion investment in infrastructure repair, is Connecticut’s chief investment broker. The term is borrowed from Wall Street and glows with the promise of a handsome return on the investment. Naturally, the over-hyped return usually is slender; the bulk of investments in education, for instance, are absorbed in salary and benefit payments to teachers and administrators. When a government taxes its citizenry and invests the tax revenue in various projects, it is moving a bucket of money from the deep end of the pool and dumpling it into the shallow end of the pool. The drawing and dumping, it should be noted, does not raise the water level in the pool. The pool, in other words, is no richer in water after the getting and spending transactions have been completed. Government, despite what most people have been told, is not a wealth producing engine; it is a wealth consuming engine.

Three things should be noted concerning these “investments.”

First, the investment is always forced. Wall Street has not yet discovered a way to force investments from investors. “Government,” George Washington said, “is force.” The payment of taxes is not a voluntary affair in which an investor bets his dollars on a promising prospect. If you decline to invest your dollars in a certain stock for instance, a broker will not haul you off to jail. If you do not pay your taxes, a forceful government will squeeze the sweat from your brow. When Governor Dannel Malloy and the Democrat dominated General Assembly decided to collect and invest tax dollars into a multi-year, multi-billion dollar infrastructure project, thus binding for thirty years governors or legislators who might wish to cut spending, the tax brokers did not have to fear that their investors would decline the order to invest.

Second, Connecticut is a state in which tax dollars are sometimes – cynics will say “often” -- diverted to unintended ends. In a brief dictionary of political terms, Connecticut Commentary defined a “lockbox” as "an unsafe safe, ostensibly used to preserve tax money for special purposes, that can be opened with a bent hairpin." Ain’t it true though?

Connecticut’s government has continually picked its pension lockbox, diverting the targeted funds to discharge recurring deficits. Gas taxes were supposed to have been sequestered in a lockbox and used to maintain the state’s now crumbling bridges and highways. But thieves arrived in the dark of night with their bent hair pins, opened the lockbox and diverted the funds towards other purposes, which is why Mr. Malloy now thinks it necessary to charge a one hundred billion dollar promissory note to the future children and grandchildren of Connecticut, supposing they all remain in the state to be charged for the sins of their fathers and grandfathers – yea even to the fourth and fifth generation. You may force a taxpayer to foot your bills, but you may not force him to remain on the bill-paying spot. This is how things work in a free America. In a Forbes report listing the top nine states from which people are fleeing in 2014 to greener pastures elsewhere, Connecticut places fifth.

Third, the general public in Connecticut does not trust that its government has invested tax dollars prudently – and neither, come to think of it, does Mr. Malloy, who has repeatedly chastised previous governors for having failed to invest tax dollars responsibly in Connecticut, Inc. Mr. Malloy has been careful not to chastise as forcefully previous legislatures, the real tax gatherers and distributors of public funds, because he knows that the last time one of the two Houses of the General Assembly had been commandeered by Republicans was in 1967. Democrats, members of Mr. Malloy’s party, have been running the getting and spending show for nearly a half century. This year, progressive Democratic spendthrifts in the General Assembly removed pension payments from the state’s constitutional cap, a nifty piece of budget legerdemain that both defanged the cap and permitted Democrats to continue their ruinous spending spree.

That spending spree, which began nearly a quarter century ago with the imposition of the Lowell Weicker income tax and has steadily increased by leaps and bounds, shows no sign of diminishing. Mr. Malloy, the most progressive governor in state history, has during his brief term in office fathered two additional tax increases, the largest and the second largest tax boosts in state history. Unfortunately, the business crowd has noticed the acceleration in spending. Usually whisperingly polite, the CEOs of major Connecticut corporations and representatives of small businesses in Connecticut were whipped out of their complacency by progressive leaders in the General Assembly, Speaker of the House Brendan Sharkey and President Pro Tem of the Senate Martin Looney, both of whom, bowing to the progressive zeitgeist, hot-wired into Mr. Malloy’s out of balance budget massive revenue increases. In an attempt to mollify restive Connecticut businesses, the Malloy-Sharkey-Looney budget was sent back to the General Assembly closed-shop, there to be revised by the state’s triumvirate But not by much, Mr. Looney and Mr. Sharkey have assured their political interest groups.

To restore its place among states as an economic powerhouse, Connecticut needs permanent spending cuts and  temporary tax increases; what it will get, after all the revisions have been enacted by majority Democrats, is a budget loaded with permanent revenue increases and easily revocable spending cuts. If during a recession – and remember, Connecticut is one of the few states in the union that still has not recovered from the Bush-Obama recession – you increase taxes, you must bear the inevitable consequences. Mr. Weicker said it best: Increasing taxes during a recession is like pouring gas on a fire. Singed Connecticut taxpayers are begging heedless progressives in the Governor’s office and the General Assembly to cease and desist.

They are not listening.       

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