Saturday, February 20, 2016

Malloy Mugged By Reality

Malloy budget already in red
It’s been some time coming, but Governor Dannel Malloy, now tripping around the state selling his “austere” budget, is showing signs that he has been mugged by reality.

He says it himself, bluntly and without the usual sugar topping: “… there is a certain reality. The nation’s gross national product last quarter grew by .7 percent – .7 percent. And there has been volatility in the stock market going back to June of last year. And that revenue is falling, not rising. That’s the reality.”

The tax-increase solution to disappearing revenues has been tried and found wanting. Numerous times during his two terms in office Mr. Malloy has been forced to rely on his rescission authority to sop-up the red ink in numerous budgets. Raising taxes, Mr. Malloy said at the somber gathering in Middletown, would be ill advised. Mr. Malloy already has imposed two massive tax increases on his tax bludgeoned state, and still death is knocking on Connecticut’s door. As of this writing, Mr. Malloy's current budget is $12.8 million in arrears. Frequent rescissions have not settled the problem of escalating deficits. Then too, elections are rounding the corner; raising taxes a third time in an election year would be foolhardy: “I don’t think there is a desire to raise taxes at the State Capitol.”

To be sure, there is a lingering desire on the part of tough-minded progressives in the General Assembly to raise taxes under the banner “The rich must pay their fair share,” but the rich in Connecticut are highly mobile, and you cannot milk a goat that escaped its pen and is heading at breakneck speed for greener feeding grounds elsewhere. Well provisioned state unions are clamoring for increased taxes on the rich even as increased spending and weak tax collections are punching yet another hole in Connecticut’s ever escalating red-ink budget.  Before General Electric (GE) shook the dust of Connecticut from its feet and moved to Massachusetts, no doubt because the winters in Connecticut were too punishing, the two Democratic leaders in the General Assembly, Speaker of the House Brendan Sharkey and President Pro Tem of the Senate Martin Looney, were assuring querulous Connecticut voters that the company was not reacting to high taxes -- because GE, said Mr. Sharkey,  paid no taxes in the state, a bald-faced half lie that fell several miles short of the truth. After GE’s move was announced, Mr. Malloy confessed, “This hurts.” Connecticut’s treasury was throbbing from repeated blows of high taxes and burdensome U.S. Senator Dick Blumenthal-like entangling regulations -- and none of the usual palliatives were working.

An election is looming in Connecticut’s bleak future, and the prospect of death at the polls has made some Democrats anxious. A future debt – Mr. Malloy’s legacy initiative, a 30 year, $100 billion infrastructure repair program – promises to elevate the debt tide at the very moment Connecticut’s battered ship is sinking beneath the waves. The good news for legislators voting in favor of the measure is that payments on the additional debt are not due to begin until the upcoming elections have been concluded and all the big spenders are tucked into their union-warmed beds. Even Mr. Sharkey has taken notice: “The reality that we’re facing right now is it’s not just a budget deficit or spending more money than we have traditionally … but there is a revenue problem and the revenue problem reflects the reality of our economy. In order for us to deal with a budget deficit, we have to face that reality. It means that state government and our budgets have to change.”

Ah yes, Mr. Sharkey once again is marching under the Democrat’s familiar, often hoisted, tried and true flag: “Connecticut does not have a spending problem; it has a revenue problem.” And the answer to such problems is to raise revenue by raising taxes rather than by cutting long-term spending, important decisions affecting Connecticut's future prosperity that likely will be postponed until the elections have been concluded. If at first you don’t succeed in destabilizing Connecticut’s economy by raising taxes, or fees, or revenue enhancers – try, try, again. Reasoning that the application of failed solutions time after time is a form of progressive madness, Connecticut’s companies and entrepreneurial talent and young graduates, clutching in their fists their newly acquired, very expensive sheepskins, are fleeing the state in search of more fruitful surroundings outside the madhouse.

And politics will continue on this road to economic perdition until progressives in the state have made of Connecticut a smoldering, rubblized ruin, the Detroit of New England or the Venezuela of North America. In Venezuela , the first to exit the failed socialist state will be the wealthy crony-socialist politicians who have caused their country’s ruin; rats are always the first to leave a sinking ship.

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