Connecticut’s Progressive Solutions: Failure Loves Company

Governor Dannel Malloy’s economic policy does not work. But he is in good company. The nonprofit health-insurance companies set up to help people enroll in Obamacare are now failing.

Mr. Malloy’s progressive economic policy may be summed up this way: State government serves as a transformer, collecting money from the real economy and disbursing it according to need, from those who have to those who have not. Karl Marx laid down the law of a socialist economy more than a hundred and fifty years ago: “From each according to his abilities, to each according to his needs.” In enlightened countries, the job is done without destroying either capital or capitalists. “The last capitalist we hang shall be the one who sold us the rope,” Marx said. Progressive ambitions in the United States have been more modest. They proceed from Matthew (19:20-24) rather than Marx, and their adherents in the United States so far have been content to await a final felicity at the final judgment:

 “Then Jesus said to his disciples, ‘Truly I tell you, it is hard for someone who is rich to enter the kingdom of heaven. Again I tell you, it is easier for a camel to go through the eye of a needle than for someone who is rich to enter the kingdom of God.’”

The proletarian beef with the rich did not begin with Marx, nor will it end with Vermont Senator Bernie Sanders, the socialist candidate for President now clawing his way to the top over the skulls and bones of Wall Street financiers. Connecticut revenue is heavily invested in the success of financial markets. Progressivism, which evolved from the religiously infused prairie populism of William Jennings Bryant, retains, even in the modern period, some notable features of its well-spring, Prairie Populists agitated for the “free and unlimited coinage of silver and gold,” an increase in the money supply, a graduated income tax, limits on state and federal spending, postal savings banks, public ownership of railroads, and the privatization of land held by corporations “in excess of their actual needs.”

This month Mr. Malloy discovered that Connecticut’s recurring debt, which is the result of the state’s progressive spending proclivities, was not resolved by his two massive tax increases or his repeated budget rescissions.  A national recession and Connecticut’s response to it, along with irreducible spending commitments and Mr. Malloy’s misguided governance, has prolonged the recession and driven revenue producing businesses to cut job production or – worse – to move out of state.

Obamacare, a new national health care program, has forced consolidation among large health care providers in Connecticut – causing some to fear that the new conglomerates, which will have roots elsewhere, will move jobs out of state. And recently it has been reliably reported that “nine of the law’s 23 state co-ops, nonprofit health-insurance companies set up to help people enroll in Obamacare, have collapsed. Over 600,000 people who enrolled in co-op health plans will lose their insurance at the end of this year. Many of them were forced into the co-ops to begin with when Obamacare canceled their private insurance policies in 2013, meaning they will have lost their health insurance twice because of the law.” Connecticut, once the insurance capital of the world, is heavily “invested” in the success of the national co-ops – thanks mostly to Mr. Malloy’s energetic support of Obamacare.

So then, largely owing to the profit restrictions Obamacare places on insurance companies, the insurance industry will become more monopolistic as large insurance giants, three of them located in Connecticut, combine with others to maximize dwindling profits. If Connecticut progressives are successful in increasing taxes from the state’s still successful financial sector, it will in the long run suffer revenue losses because 1) successful companies tend to move away from tax prone governments, 2) profits and job growth go together, like love and marriage; they also decrease together, and 3) Connecticut over the last three decades has offered ample demonstrations that its Democrat dominated General Assembly is incapable of biting the union bullet and making permanent long-term cuts in spending. What rational CEO of a prosperous company would be so foolish as to move his business into such a wintry and hostile climate?

The answer may be deduced from an offhand comment made by Ben Barnes, Mr. Malloy’s budget guru, last June. Connecticut should get used to frequent deficits, Mr. Barnes said. When because of over spending the revenue well runs dry and the water table is lowered, every thirsty politician must get used to hasty and imprudent budget cuts. The time is fast approaching when Democrats and Republicans alike must choose one of two courses, both of which are unpalatable:  cut spending or cut Connecticut’s throat.