Wednesday, September 21, 2016

Connecticut Down: The Spending Spiral And The Demise of Connecticut


“I am deeply concerned for the state’s fiscal condition, which I think we can agree is deteriorating” -- Jim Smith, Webster Bank chairman and CEO

Mr. Smith is not alone. For years, big spenders in Connecticut have been moving money from the private economy to state coffers, and the additional funds have only whet the appetite for spending among cowardly members of the General Assembly.

We now have a graphic that depicts Connecticut’s unsustainable budget growth:


The Weicker-Malloy-General Assembly tax increases knee-capped Connecticut’s economy. It took the state ten years to recover jobs lost during the recession that accompanied the Weicker income tax and, following Mr. Malloy’s crippling tax increases, Connecticut even now has not recovered jobs lost during the George W. Bush-Barack Obama recession. Mr. Obama has added nearly $10 trillion to Mr. Bush’s $10 trillion deficit, even as he inveighs against a free market from international platforms, implicitly approving the superior socialist economy of Venezuela, which has long since run out of other people’s money and whose long suffering people are now forced to cross borders to obtain necessities such as toilet paper.

Connecticut has recovered only 81% of the 119,100 seasonally adjusted total non-farm jobs lost in the state during the national recession that ended in June 2009. But recessions, job losses and wealth production have not figured into the calculations of politicians who have increased state spending 201% since the income tax was implemented in 1991.

Said Mr. Smith, “I strongly believe that fiscal pressures and related uncertainty regarding taxes and regulatory rules are largely responsible for the low and waning confidence expressed by businesses and consumers. You have it within your power to change the course of events by defining the spending cap, and especially the exemptions, in a way that sustainably controls total state spending, lowers the state’s cost of doing business, and improves public sector productivity.”

Governor Lowell Weicker’s income tax, we now know, saved members of the General Assembly, a majority of whom are Democrats, the political trouble of restraining spending, and the additional dollars brought in by the income tax fueled unrestrained spending, as demonstrated in the above graph. No state can long survive a growth in spending that is 134% above a 67% Consumer Price Index and 137% above Connecticut’s Median Household Income. It cannot be done. Mr. Weicker – and after him Governor Dannel Malloy, who imposed on the state the highest and second highest tax increases – saved state government and ruined the state.

Every dollar appropriated in taxes by state government is a dollar lost to entrepreneurial activity in Connecticut, and that is why taxes ought to be modest and necessary. The imperative necessity of spending restraint has now become a whispered word on everyone’s lips. But though the spirit may be willing, the political flesh, as we all know, is exceedingly weak.

Just how weak the state’s economy really is may be seen by the predictable fate of Connecticut’s spending cap. The so-called spending cap was NEVER more than a political feint, rhetorical wadding in Connecticut’s spending blunderbuss. It was introduced by Mr. Weicker as a political ploy to garner votes in the General Assembly in favor of his income tax – a tax, it should be noted, that was vigorously opposed by two previous Democratic Governors, Ella Grasso and Bill O’Neill.

The ceiling on the spending cap was a fiction, and finally, in November 2015, Attorney General George Jepsen exposed the fraud in an advisory opinion solicited by Republican Minority Leader Len Fasano that declared the cap had never been operative because the General Assembly had never supplied necessary definitions in the 1991 constitutional legislation that should have triggered its implementation. The spending cap was a stillborn corpse; Mr. Jepsen’s formal advisory opinion simply gave it a decent burial.

This reality, obvious to everyone, has yet to penetrate the sensibilities of House Majority Leader Joe Aresimowicz, whose reaction to the sizable, apparently imperishable  deficits projected by the legislature's nonpartisan Office of Fiscal Analysis is paralyzingly stunning. Mr. Aresimowicz, plunging his head ostrich-like into the sand, predicted that the state's economic future is "brighter than it's guessed to be right now,” according to a story in The Hartford Courant. This is a variation of the old Yogi Berra quip, “The future ain’t what it used to be.” For purposes of the upcoming General Assembly elections, the future for dominant Democrats in the General Assembly will be exactly what Mr. Aresimowicz wants it to be. Selling this rosy product to Connecticut voters whose view of reality is less optimistic than tax thirsty legislators will be a tough slog, because it involves a denial of reality that is both comic and dangerous.

The question most voters will be asking themselves, as they rush to the polls in November to throw the bums out, will be – who do you serve, yourself, special interests or me?

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