If you’re passing by a house on the street and see flames licking the windows, hear the screams of
people rending the air, watch them as they pour out of the house carrying with
them their prized possessions, note the blasts of firetrucks approaching, it
would hardly be presumptuous of you to conclude that the house is on fire.
Politicians and
legislators do not as quickly reach such obvious and solid conclusions; they
are extraordinary people whose sensory apparatus is… well… different. For the lean
and hungry ambitious politician, whether or not the house is on fire depends
upon whether it is politically prudent to reach the obvious conclusion. One
must consider exigencies before pulling the alarm: For instance, “If I cry
fire, will I be elected next term?”
A quarter century
ago, a newly elected governor – former “Republican” Senator Lowell Weicker – decided not to liquidate a sizable deficit through spending cuts.
And although two previous Democratic Governors, Bill O’Neill and Ella Grasso,
had steadfastly resisted calls to impose an income tax, Mr. Weicker plunged
ahead; after some arm-twisting and some political payoffs, the thing was done.
Left-leaning newspapers praised Governor Weicker for showing rare courage. Even
today, some Connecticut commentators continue to celebrate Mr. Weicker’s
testicular fortitude. It was thought and said at the time that Connecticut did
not have a spending problem; it had, instead, a revenue problem. The obvious solution, income tax, would settle that annoying difficulty and pave the way to a rosy future.
And the future is
now. Headline in CTMirror: Eroding income tax receipts undo much of recent state budget repair. Headline in Forbes Magazine, August 1, 2013:
“How Did Rich Connecticut Morph Into One Of America's Worst Performing Economies? by Jim Powell.
Mr. Powell’s data
rich account showed: that Connecticut ranked 50th, the worst in the
nation, in economic growth; that the number of small businesses in Connecticut
had declined 2.2 percent before
the national recession; that a massive tax hike, the largest in state history,
levied during the Malloy administration provided only a temporary dispensation
from budget deficits; that Connecticut’s debt per capita — $27,540 – was the fourth
largest in the nation; that according to Barons,
Connecticut finances were the worst of all the states; that the American
Legislative Council had ranked Connecticut 46th in economic
performance and 43rd in economic outlook.
These red flags, and
many more, were flapping under the noses of Mr. Malloy and his confederates in
the Democrat dominated General Assembly even before Mr. Powell’s review appeared in
Forbes. But Democrats in the state were determined to whistle past all the
tombstones in Connecticut’s cemetery, which now includes General Electric (GE).
In a luminous column in New York’s The Sun, Red Jahncke, President and CEO
of The Townsend Group, pointedly notes that there are two questions
Connecticut must confront: 1) Why did GE leave Connecticut? and 2) Why did GE
decide to move its headquarters to Boston, Massachusetts? The answers to both
questions are not at all the same.
“GE,” Mr. Jahncke
wrote, “didn’t act just out of pique. It looked deeper and further than June’s
tax hike. Connecticut is facing huge budget deficits of $355 million in 2017,
$1.7 billion in 2018 and $1.9 billion in 2019, according to the state’s
non-partisan Office of Fiscal Analysis. A cumulative deficit of almost $4
billion in an annual budget of about $20 billion is an abyss. Future tax
increases are inevitable.” It happens that Connecticut can do something to
address this problem.
But short of
importing MIT from Massachusetts to Connecticut, not likely, or changing the
economic structure of the state from a financial powerhouse to a technological and
manufacturing hub to meet GE’s ever changing needs, addressing the second
question does not leave the state in a superior or competitive business
posture.
High taxes, an under-financed pension system, a migration out of the
state of highly paid worker and an in-migration of lower paid workers, repetitive
out of balance budgets and ineffective rescissions, the crowding out of future solutions
by grandiose, legacy building, monstrously expensive spending programs – Mr.
Malloy’s 30 year, $100 billion infrastructure improvement program comes to mind
– the upward arc spending in Connecticut since pre-income tax days, a complex,
progressive tax structure that spares both the rich and the poor from “investing”
in Connecticut’s government, a burdensome regulatory apparatus, and the seeming inability of Connecticut's tin eared Democrats
to hear the message so loudly shouted from every rooftop in the state – all these are
problems Connecticut’s non-responsive government CAN address.
Mr. Jahncke ends his
brief cry of despair with a drum roll:
“It is time for real cuts in state employee compensation, primarily retirement benefits.
“The problem is that the same guy who negotiated the 2011 deal is, or soon will be, in secret negotiations (they’re secret, so we don’t know) on a new multi-year deal with the public unions which supported him in both his 2010 and 2014 elections. No doubt, that scared GE.”
When those in power
lack character, adversity drives away the best and leaves the worst in command
of depleted solutions.
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