Wednesday, June 01, 2016

Bertolini, The Oracle Of Aetna

Governor Dannel Malloy has not been able to discover from cross-talk between his office and CEO of Aetna Insurance Company Mark Bertolini whether Aetna, following the company’s merger with Humana, will move its headquarters out of state. The resolution of this mystery is important because a removal of Aetna’s headquarters from Connecticut will reduce the state’s revenue stream. Should Aetna pull a GE on Mr. Malloy, Connecticut's notoriously out-of-balance budget will suffer yet another inconvenient battering – this on the eve of state elections.

For this reason, efforts have been made to decipher the cryptic comments Mr. Bertolini earlier made to Aetna stockholders. Like the oracles of the “False Prophet Alexander” lampooned by the Roman satirist Lucian, which oracles were richly detailed but opaque, obscure and non-responsive, Mr. Bertolini’s statements  to his stockholders admit of several meanings. Their sense has befuddled both Mr. Malloy and Luke Bronin, the Mayor of Hartford, a city now teetering on the brink of bankruptcy.

In one account, Mr. Malloy confessed his administration was attempting to "get to the bottom" of Mr. Bertolini’s obscure comment that Aetna is reviewing where to locate its corporate headquarters; Mr. Bronin, having emerged from a meeting with Mr. Bertolini, announced that Aetna, anchored in Hartford since 1853, was "clearly considering the size" of its presence in the city.

“Are you going or staying?” is not a riddle of the Sphinx.

Here is Mr. Bertolini, the tease, tickling his stockholders' ears during Aetna’s annual meeting on May, 20: The Company, Mr. Bertolini said, was required by the purchase agreement it had signed with Humera to move some jobs to Louisville, Kentucky's largest city, home to Humera. And, the oracle added enticingly, “Having said that, the rest of all of our real estate is under review.” Aetna's corporate headquarters, Mr. Bertolini said, will remain in Hartford – “until further notice.” In the post-GE period, one hears bells tolling in such ambiguous language. Do the bells toll for Connecticut?

Mr. Malloy has confessed that neither he nor members of his administration know how to interpret Mr. Bertolini’s evident unwillingness to “commit to Connecticut,” as one paper put it.

"We're trying to read into that," said Mr. Malloy. "We're trying to get to the bottom of it and look forward to doing that."

The befuddlement of Democratic leaders in Connecticut is becoming tiresome – and needlessly repetitive. Long before General Electric pulled up its incorporation stake in Connecticut, moving its headquarters to Boston, members of the Malloy administration and Democratic leaders in the state’s Democratic dominated General Assembly were attempting to interpret unequivocal statements made by General Electric CEO Jeff Immelt that taxes were too high, regulations too entangling and budgeting at the State Capitol too hectic and unpredictable to provide the necessary stability for businesses located in Connecticut. When the chronically broke General Assembly, deaf to all pleadings, raised business taxes by $700 million and initiated a new data processing tax, Aetna spokeswoman Cynthia Michener weighed in: “Such an action will result in Aetna looking to reconsider the viability of continuing major operations in the state."

Nothing cryptic there.

President and chief executive officer of the Metro Hartford Alliance Oz Griebel  politely suggested that state planning should keep pace with corporate planning. Budget crises were too frequent and tax policy too haphazard: “If companies are looking out five to 15 years, the political structure has to do the same.”

State Republicans have been bold enough to suggest several times that the frenetic patching of budget holes with tax and fee increases and excessive borrowing will not be enough to pull Connecticut out of its nosedive. Investor’s Business Daily (IBD) now reports that Connecticut has descended to last place in a “Best Run State” ranking. “The ten most financially sound states in the country,” IBD reports, “are all heavily Republican, while all but one of the ten worst states are heavily Democratic.”

The state’s befuddling problem is easy to diagnose: Connecticut, “heavily Democratic,” has continually increased permanent taxes. Mr. Malloy is the architect of both the largest and second largest tax increases in Connecticut history. On the other hand, no serious attempts have been made to curb spending PERMANENTLY. The General Assembly responsible for all the patch work solutions could not even restore Connecticut’s Constitutional cap on spending, which had been attached a quarter century ago to then Governor Lowell Weicker’s income tax bill to persuade doubtful legislators that the income tax measure would not lead to improvident spending. It did. Attorney General George Jepsen, once Chairman of the state Democratic Party, only recently found the cap to be unconstitutional -- because legislators had never provided legal definitions to implement the measure.

There are no permanent breaks on spending in Connecticut, only pious declarations from Connecticut’s Democratic leaders that the problem will be confronted sometime, somehow – perhaps after the upcoming elections.


In the meantime, the CEOs of large Connecticut companies are correctly reading the signs of the times – and skedaddling to greener pastures elsewhere.
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