Thursday, October 06, 2016

Connecticut’s Budgets, Unions And Cowards

Over the past 25 years, Connecticut has increased taxes by leaps and bounds. The first leap began when then Independent Governor Lowell “The Maverick” Weicker muscled through the General Assembly an income tax measure.

Governor Dannel Malloy increased taxes twice. During his first term, he and the Democrat dominated General Assembly imposed on the state the largest tax increase in its history; and this was followed during his second term by the second largest tax increase in state history. Yet, despite all this new revenue flowing into state coffers, non-partisan budget analysts inform us that the budget deficit during the current fiscal year ending last June is $170 million. Looking forward to fiscal year 2017-18, the legislature’s nonpartisan Office of Fiscal Analysis (OFA) has projected a deficit of about $1.3 billion. The budget deficit that had occasioned the introduction of the Weicker income tax was about $1.5 billion. The income tax itself was a permissive flag that invited the unrestrained spending that has so recently distressed Mr. Weicker.

The math suggests that we are back to square one -- 25 years behind the eight ball. We now know that both tax receipts and budget deficits have increased during the last quarter century, which means this: the more you tax, the less revenue you receive. Once the level of taxation reaches the point of diminishing returns, further tax increases reduce revenue. This problem can be overcome ONLY if businesses in the state expand, increase production and create new jobs and new wealth. But Connecticut has yet to recover the total jobs it lost during the current recession; elsewhere in the nation, the recession ended five years ago.

Mr. Weicker recently surfaced to express his astonished dismay, though he did not blame either himself or Mr. Malloy for the looming deficits. Instead, he shifted the blame to the General Assembly and the people of Connecticut.

“After I became Governor and we enacted the Income Tax,” Mr. Weicker told Mark Davis of News 8 WTNH, “the state was in the black.” The balanced budget he left behind after he had declined to run again for Governor, Mr. Weicker told Mr. Davis, eventually ran into the red. “All of those who cursed me, including… the Representatives, John Rowland, everybody went ahead and spent all the money…  When Dan Malloy became governor, they were right back in the red, which is where we were back in 1990.”

Actually, it is worse than even Mr. Weicker supposed. The income tax produced successive budget surpluses, which encouraged spending. Weicker had raised taxes during a recession – after having warned in his campaign that doing so would be comparable to pouring gas on a fire. For once, he was right. The gaseous surpluses fueled the fiery disposition on the part of all incumbent politicians to spend more money and so satisfy the special interests that contribute to their re-election efforts. The surpluses disappeared, the spending continued and – WHO WOULD’A THUNK IT? -- here we are again, suffering through yet another recession and producing red ink far into the future. Why should any of this surprise Mr. Weicker or, for that matter, Mr. Malloy, whom Mr. Weicker holds blameless for throwing gas on Connecticut’s fiery, prolonged recession?

In the minds of progressives such as Mr. Weicker and Mr. Malloy, there is no connection – NONE – between raising taxes to cover deficits and the seemingly endless winter of Connecticut’s discontent. The truth is that tax increases and consequent diminishing revenues are parallel tracts on the same train line that leads to – perpetual deficits. If you want to make deficits PERMANENT, increase taxes rather than spending cuts to reduce deficits. Caught in this “little ease” -- a torturous cell so small that the prisoner confined in it is never permitted to stand up straight and stretch his spine – what must be done?

Everyone now knows from bitter experience the answer to this question. The state must 1) enact permanent, long-term spending cuts, 2) cut those taxes that punish the proper and unfettered use of entrepreneurial capital in a free market, 3) significantly reduce wealth-reducing, pointless regulations, which really are a tax on production, 4) banish crony capitalism from the state and 5) a remedy addressed to politicians especially, break free of your political attachments, stand up straight and show the general public, rather than the special interests you serve, that you have a spine.

During his first term in office, the General Assembly granted to Mr. Malloy what Chris Powell, the Managing Editor of the Journal Inquirer, called a “plenipotentiary power” to negotiate contracts with unions, Connecticut’s fourth branch of government, represented by SEBAC. In essence, the cowardly Democratic dominated General Assembly approved a preliminary budget, permitted the Governor to establish long-term contracts with unions that materially affected the bottom line of the approved budget. And, crucially and fatally, the General Assembly did not, as it is constitutionally obliged to do, approve and sanction the final budget-busting product of the secret negotiations. In other words, the cowardly and duty-fleeing General Assembly simply transferred to Mr. Malloy its own imprescriptible constitutional powers, after Mr. Malloy told Democratic leaders in the General Assembly he would take the pre-election political bullet for them.

And the same thing is happening right now, without a mumbling word from a cowardly General Assembly, a bullet-ridden Malloy – or Mr. Weicker, who saved politicians in Connecticut and ruined the state. 
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