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The Lamont Budget

Deducing Governor Ned Lamont’s budget proposal from meetings he has held with Democrat leaders in the General Assembly is a little bit like deducing Shakespeare from lamb chops.

Here is Senate Pro Tem Martin Looney  on their talks, according to a piece in CTMirror: “’We did talk a little bit, just in general, about the nature of the sales tax and the fact it was structured when our economy was somewhat entirely dependent upon products and goods, and now it’s heavily dependent upon services,’ Looney said. ‘We did say, basically, the two options to address the sales tax are, one, a base expansion, and the second is a rate increase.’”

Lamont’s style, we are told, is to cast a broad net and draw into it viable ideas, presumably from Republicans as well as Democrats. He was advised at a Democrat governor’s meeting that this was a treacherous course. “They said, ‘Absolutely not. Keep your cards close to the vest. Anything you talk about will be immediately leaked. You’ll be embarrassed and it won’t move the ball at all,’ Lamont recalled, pausing a moment before adding, ‘I think you kind of know that’s not my style, right?’”

All the talk within the Lamont camp so far has been about raising revenue. Ideas concerning spending cuts are likely to come from Republicans, who have been marginalized during the recently concluded elections. The operative principle of the increasingly progressive Democrat Party is that once you’ve settled a budget deficit – Connecticut’s deficit is now swelling to three or four billion dollars – you have settled the problem. This notion is worse than wrong; it is silly and anti-historical.

Connecticut has almost always discharged its past deficits, once the bloom was off the rose of the Lowell P. Weicker Jr.  income tax, by increasing taxes or broadening the tax base. The Malloy administration will go down in the annals of the state as having imposed collectively the largest tax increase in state history.

And still we have budget deficits.

So then, Connecticut’s problem is not the deficit per se. If you settle deficits through tax increases, you have not attacked the cause of the deficits. Tax increases fuel spending. If the problem is that the state is spending far more than it is taking in, the ready-at-hand solution – raising taxes – may and has been exacerbating the problem.

Looney’s solution to the problem of recurring deficits is no different in kind than Malloy’s or that of other past governors: You settle a deficit by raising revenue and, if the deficit recurs the next fiscal year, you raise revenue again, and again, and again… until, in the memorable quip of British Prime Minister Maggie Thatcher, “you run out of other people’s money.”

There are signs in Connecticut, studiously ignored by progressives such as Looney, that the state is running out of other people’s money. People and businesses fleeing the state, literally voting against a rapacious and incompetent state government with their feet, should serve as a red flag. Indeed, Malloy himself raised a red flag when he vowed during his second campaign not to raise the income tax again. Looney plans to broaden the income tax and to raise other taxes. When he has finished the job, entrepreneurial capital will have taken wing. Why? The general rule is: Whatever you tax tends to disappear.

“Curiously,” Bill Buckley wrote in Cruising Speed, way back in 1971, “the failures of Communism are more often treated as a joke than as a tragedy. (As in the current jollity: What would happen if the Communists occupied the Sahara? Answer: Nothing—for 50 years. Then there would be a shortage of sand.)”

The Democrat dominated General Assembly is running out of sand. Tax credits, low interest loans and loan forgiveness all pay tribute to the notion that taxation reduces business activity. Connecticut gives tax credits to businesses the state wishes to attract because businesses generally are drawn to states in which the cost of doing business has been reduced by reductions on regulations and taxes. In pre-income tax days, Connecticut was a haven and a refuge from high tax states such as New York.

Early in February, New York Governor Andrew Cuomo, who had just finished celebrating a bill that winks at infanticide, was in agony when he learned – big surprise! – that New York was facing a $2.3 billion revenue shortfall.  A shocked Cuomo warned profit-eating progressive legislators that the loss of revenue “could not be made up by continuing to tax the wealthiest New Yorkers, the top 1 percent of whom already contribute 46 percent of all government revenue — at increasingly higher rates.”

“God forbid,” Cuomo said, “if the rich leave.”

They won’t be coming to Connecticut anytime soon.


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