Wednesday, March 01, 2017

Connecticut And The Coming Peasants' Revolt

If you can hold the line on taxes, you will have created an impetus within the laggard General Assembly for real, long-term cuts in spending, and it is spending, not insufficient revenues, that is driving state debt. The pantry at the Yankee Institute is full of ideas for permanent spending reductions, none of them palatable to progressive Democrats in the General Assembly. To no one’s surprise, rational cuts in spending will upset the status quo apple cart.

Most people in Connecticut might be surprised at some of the commuters riding in the cart. Progressives, of course, have their tickets punched, so they think, for the next fifty years. The central tenet of Connecticut progressives in the General Assembly, nearly all of them tied to the iron and inflexible apron strings of the state’s employee unions, is that government is good and more government is better; in order to finance this greater good, additional taxes will be necessary. That has been the operative principle among Democrats ever since former Governor Lowell Weicker drove an income tax pipeline from salaried workers' pockets to tax consumers in 1991. Big spenders in the General Assembly were very grateful to him, and Weicker had one of those personalities that luxuriated in public arousal. Like Obama, he was determined to save the peasants despite their hearty resistance to his bizarre ideas.

For fifty years and more, progressives have marched under the same banner, emblazoned with their operative motto: Connecticut does not have a spending problem; it has a revenue problem. After Governor Dannel Malloy, traveling in Weicker’s oversized shoes, had imposed on Connecticut’s once vibrant economy both the largest and the second largest tax increases in state history, his economic guru, Ben Barnes, was struck by a bolt from the blue: while taxes had been increasing steadily, spending also had been increasing proportionally. Imagine that – while the horse plodded steadily ahead, the carriage to which he was attached followed in his train.

The distance between the horse and carriage and the debt looming on the horizon becomes more and more distant. That distance is measured in dollars, not miles. Presently, Connecticut owes the future $81 billion in long-term liabilities, a good chunk of which is owed to state employees in benefit payments. But, not to worry – to relieve the strain of payments, the Malloy administration has pushed them further into the future, increasing the distance between state government and any permanent solution to debt.

Back to the apple cart – who is sitting in the cart? Who is getting the free ride? The true answer is – anyone who has escaped the tax whipping. People at the lower end of Connecticut’s economic scale will receive no lashes, but neither will people at the upper end, for reasons that have been made plain to us by billionaire Warren Buffett, who STILL is paying less in taxes than his secretary. Buffet’s secretary is a middle class worker; her back receives the tax lash.

It was President John Kennedy who inaugurated so called “trickle-down economics” two years before he was assassinated. The Kennedy tax reform – raise the tide that lifts all the boats by cutting tax rates – was luminously presented by the president to the Economic Club of New York. His program – increase revenue by reducing tax rates, thus spurring business activity that would in its turn increase the flow of revenue to the federal government – was so successful that his successor, Lyndon Johnson, was able to use the flood of new revenue to finance his Great Society programs. Even functional economic illiterates understand that business expansion increases tax revenues.

While the tax tide has been increasing for decades in Connecticut, revenues have been decreasing. “Lower Than Expected Tax Collections From Wealthy Lead To Growing State Deficit” the Hartford Courant has recently reported. A receding tide lowers all the boats. “Budget officials were projecting a growth rate of 2.7 percent for withholding taxes for the fiscal year, but the revised number is now 2.2 percent.” That figure shouts to all ears that Connecticut has become a no-growth state. Estimated tax payments in Connecticut “’are down approximately 9 percent year-over-year, 90 percent of that variance is due to the top 100 taxpayers with the remainder of filers trending flat,’ the fiscal office said Monday.”

It is just these kinds of events, combined with a studied ignorance of eternal truths – the tax pond has been drained dry; the more they have, the less I have – that form the powder kegs of revolutions from below. Arrogant ruling aristocracies give way, when the peasants are lashed enough, to just the kind of revolution that led Sam Adams, the father of the American Revolution, to write to patriots in Boston and the world: “If ye love wealth better than liberty, the tranquility of servitude than the animating contest of freedom, go home from us in peace. We seek not your counsel or your arms. Crouch down and lick the hand that feeds you, and may posterity forget that ye were our countrymen.”

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