Governor Dannel Malloy has a rough and tumble personality.
Even his friends and political associates acknowledge that he has “sharp
elbows,” but one of Connecticut’s prominent public pulse takers, director of the Quinnipiac University poll Douglas Schwartz,
notes that there are more important issues in elections than likeability: “…the
economy is clearly the most important issue in this year's governor’s
election.”
Romney-bitten Republicans have heard this one before. Former
Governor of Massachusetts Mitt Romney’s presidential campaign was all about the
economy, stupid. President Barack Obama version of economic ills was highly bowdlerized,
and well-padded with what frightened Republicans call “social issues.”
Republicans – especially in Connecticut, where the party is awash in “fiscal
conservatives” – consistently retreat with their pants on fire from social
issues, leaving the field entirely to Democrats, with predictable results.
The economy is a broad and touchy subject and, like a
porcupine, full of sharp quills. Incumbent chief executives who during the
course of their term in office have had ample opportunity to devise and
implement solutions to a sluggish economy will insist that any continuing
sluggishness is due primarily to the ineptitude of their predecessors. They are
not always as quick to note that their predecessors also are responsible for
the good fruits incumbents invariably attribute to themselves. But that’s politics,
and a savvy politician who cannot shuck off on those preceding him the troubles
for which he is responsible -- while at the same time taking credit,
Chanticleer-like, for the rising of the morning sun -- perhaps ought to be
selling used cars.
Some solutions to chronic debt work, others don’t. On
Election Day, November 4, 2014, Connecticut voters will have had the advantage
of monitoring for four years Mr. Malloy’s solutions to an anemic economy. The chief
solution Mr. Malloy hit upon during his first term is not very different from
that of one of his gubernatorial predecessors whom he has declined to swipe with
his sharp elbows.
In response to a massive debt in 1991, Mr. Weicker pushed
through the General Assembly an income tax bill that raised the revenue ceiling
to meet a debt caused by improvident spending and in so doing forever changed
the economic posture of Connecticut. Mr. Malloy, facing an almost identical
debt, pushed through the Democratic dominated General Assembly the largest tax
increase in state history. Despite Mr. Malloy’s tax hike, whoever is elected
governor in 2014 will be facing a debt comparable to that faced by Mr. Weicker
a quarter century ago. Debt-wise, we are back at square one.
What reasonable deductions may be drawn from Connecticut’s
recent economic history? There are several.
Spending is tied inextricably to tax increases: As taxes
increase, spending increases. And this is why tax increases are not an
effective solution to debt, which is caused by spending and can be reduced in
the long term only by spending cuts.
A tax increase – better still, borrowing, which shifts debt
payments forward to children yet unborn -- may be an efficient means of meeting
an immediate debt, but the unintended consequences of tax increases are, to put
it mildly, destructive to the economy for a host of reasons.
Tax increases are economic disincentives. The money taken
from a person or company in taxes must be replaced somehow if the person or
company, suffering the consequences of a continuing economic slowdown, is to
maintain a precarious status quo. Faced with a prospective deficit, persons and
companies do the same thing that government should do to maintain equilibrium:
They cut spending or they attempt somehow to increase their incoming revenue. A
person who cannot afford to pay additional taxes might get another job, always
a difficult chore in a stagnant economy. A business seeking to maintain its
income stream might lay off workers, dip into its R&D reserves, raise the
price of its goods or services, if possible, or move its operations elsewhere.
Then too, every dollar removed from the private to the public market place is a
dollar that cannot be spent by a person whose prudent spending may stimulate
the economy, or a company that otherwise might have used the dollar to increase
the real wealth of the state, thus increasing the total revenue available to
the state to discharge its own debts. The less disposable income people have,
the more difficult it will be to raise revenue. The more revenue a state has at
its disposal, the less inclined it will be to govern its own ferocious inclination
to spend tax monies.
“Them that’s got shall get; them that ain’t shall loose”
applies as well to governments as to the unrepentant rich.
Before she tucked her gubernatorial campaign to bed, Martha
Dean raised a point in her stump speech that was both an eye opener and a
reliable applause line: “People in Connecticut are finished. They’re done.” Ms.
Dean meant – it is no longer possible to raise taxes to meet a deficit. After boosting
taxes to satisfy appropriations that had tripled within the space of four
governors, the revenue well has now gone dry. There is no more juice in the
lemon. If you raise taxes on people, their own budgets will be pushed into the
red. If you raise taxes on companies, they will move to secure the
profitability of their operations. It’s over – done – fini. You can’t make
lemonade from a lemon peel.
Flashback – 1988.
Democrats, who have controlled and shaped Connecticut’s budgets for a half
century, have just pushed through a budget that calls for neither tax increases
nor budget cuts. Mourning the passing of budget surpluses, Governor William O’Neill,
considered a fiscal conservative, never-the-less stresses the need for spending
increases, which will be paid out of the state’s “rainy day fund.”
Republicans grouse that Democrats have depleted a fund that
was to be used for emergencies only. House Minority Leader Robert G. Jaekle,
the New York Times reported, rose in opposition to the measure: ''It's a very
dishonest budget, and I'm very disappointed,'' Mr. Jaekle said.
Senate President pro tem John B. Larson of East Hartford responded,
''I think 11 percent [increase in spending] is justified. That's why we have a
rainy day fund, so we can offset potential problems.”
From there, Democrats moved the budget forward. Mr. O’Neill’s
1988 budget was $6.8 billion.
And now?
Revenue sources in the general fund, FY 2013
($ in millions)[7]
|
|||||||
State
|
Sales tax
|
Personal income tax
|
Corporate income tax
|
Gaming tax
|
Other taxes and fees
|
Total
|
Per capita revenue**
|
Connecticut
|
$3,857
|
$8,719
|
$742
|
$612
|
$5,437
|
$19,366
|
$5,385.31
|
$1,034
|
$1,495
|
$171
|
$0
|
$351
|
$3,051
|
$2,296.92
|
|
$5,164
|
$12,831
|
$1,822
|
$0
|
$7,352
|
$27,169
|
$4,059.42
|
|
$0
|
$0
|
$552
|
$3
|
$1,728
|
$2,283
|
$1,725.03
|
|
$873
|
$1,075
|
$137
|
$1
|
$1,238
|
$3,324
|
$3,161.17
|
|
Per capita figures are calculated by taking the state's total
revenues and dividing by the number of state residents according to United
States Census estimates for 2013.[8]
Source: National Association of State Budget Officers |
According to a January 2014 report by the nonprofit
organization State Budget Solutions, Connecticut had
a state debt of over $112 billion. Its state debt per capita was
$31,298. The report revealed that state governments faced a combined $5.1
trillion in debt, 33 percent of annual gross state product. The obligation
amounts to $16,178 per capita in the nation. A bulk of the state debt -- 79
percent -- was linked to unfunded public
pensions.
Such are the very expensive fruits of progressivism and one
party government.
Comments
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Governor Malloy has refused all efforts to rein in the size and cost of state government, as evidenced by the record tax increase he imposed in his first two years, and the nearly 10% spending increase he has proposed for the next two years.
Furthermore, he has failed to adequately address the structural problems leading to Connecticut’s growing long-term liabilities, including state pension and health care benefits, which are the highest per capita in the country.
Connecticut also has the highest per capita debt in the nation...http://www.mckinneyforgovernor.com/issues/