Friday, February 05, 2016

Mother Aetna’s Spoiled Children

Mark Bertolini CEO Aetna Humana
In Mario Puzo’s “The Godfather,” Michael Corleone, plotting to kill a crooked cop, says to his brother Sonny, “It's not personal, Sonny. It's strictly business.”

Ya’gotta do what ya’gotta do.

If Aetna CEO Mark Bertolini does move Mother Aetna’s home office from Hartford, Connecticut to Louisville, Kentucky’s largest city, he can also plead it’s only business. General Electric (GE) recently uprooted itself from Fairfield, Connecticut to Boston, Massachusetts – just business, nothing personal… please try to understand.

"We've done the analysis," Mr. Bertolini said five years ago, "and, quite frankly, Connecticut falls very, very low on the list as an environment to locate employees . . . in large part because of the tax structure, the cost of living, which is now approaching, all in, the cost of locating an employee in New York City.”

Such “hits,” to borrow the Mafia term, are not generally shouted from the rooftops. The possibility of dramatic uprootings are conveyed by subtle body language, a frown here, a warning word there, and threats so understated it would take a raw-nerved politician weeks to decode them.

GE CEO Jeff Immelt turned all this on its head. He WAS shouting from the rooftops just before he shook the dust of Connecticut from his feet and headed to Massachusetts, formerly “Taxachusetts.” Mr. Immelt’s message to Governor Dannel Malloy and Connecticut’s Democratic dominated General Assembly was an iron-fisted, unambiguous BANG: Get control of spending, particularly pension obligations; stop taxing the engines of prosperity; and repeal your new Unitary Tax, which will drive large multi-state businesses from Connecticut. When political decision-makers in Connecticut showed themselves hostile to such pleadings, GE left town – nothing personal.

After GE’s “hit,” Mr. Malloy sniffed, “You win some, you lose some.” Speaker of the House Brendan Sharkey and President Pro Tem of the Senate Martin Looney, having taunted Mr. Immelt as a tax-scofflaw, were not convinced the company had pulled up stakes in Connecticut for reasons given by Mr. Immelt. It was left to Red Jahncke, President and CEO of The Townsend Group to point out what ought to have been obvious all along: that the reasons GE left Connecticut, lucidly stated by Mr. Immelt in his many public rooftop proclamations, and the reasons GE chose Boston as its future nesting place were, necessarily, not the same.

Mr. Immelt’s public display of political angst appeared to have made a few converts. Following GE’s leave-taking, a Hartford paper, generally subtle on the question of government reform – the only kind of reform that might pull Connecticut’s chestnuts from the fire – found its spine and sighed in an editorial, “A wage freeze looks necessary, given the state's dire fiscal condition. There must also be concessions on (state employee) benefits.” Serious business there.

How many CEOs of companies in Connecticut and elsewhere were watching Connecticut’s instructive-destructive melodrama from the wings? Was Mr. Bertolini, perhaps, among them? We are back to subtlety. Does the the Kentucky-Bertolini romance portend yet another Immelt-like rupture in Connecticut?

Maybe, thought Senate leader Len Fasano, a Republican Savonarola indelicately bringing up the matter of papal immorality: “Aetna, I believe, is under the same impression that Connecticut is not going to fix its problems. They clearly said, 'We are clearly committed to Louisville, Kentucky.' Then when politics came into play, they said, 'Well, for now, we're in Hartford.' Clearly, they're leaving the state. I would suggest they've already done some clearing out of the state already. This just speaks to a Democratic majority who wants to put blinders on, who doesn't want to see the facts because it doesn't fit their narrative, and want to continue with the status quo. We are in deep trouble in this state. ... We've gotta fix this.”

The possibility  of further business flight was dangling like a Damoclean sword over the head of Governor Dannel Malloy as he mounted the rostrum to deliver his second State of the State address before Connecticut’s General Assembly. The ladies and gents in the audience were all ears, and when Mr. Malloy proposed that the short session should be devoted strictly to budgetary matters – eschewing the pet projects legislators often tuck into end-of-session implementer bills to enhance their re-election possibilities – he received the most raucous applause of the afternoon. It was a fine and timely suggestion. Serious reforms that return any of the three branches of government to their pristine purposes as define in constitutions and statutes will hasten the state’s renewal and give tax-whipped Connecticut citizens fresh reason to believe that politicians generally stand for something more solid and lasting than their re-election campaigns.

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