Monday, January 13, 2020

Twenty Pounds Of Tax Increases, One Ounce Of Spending Cuts, Please

Haskell and Hillary
Keith Phaneuf, a reporter for CTMirror, set afire the imposture without doing too much damage to the tender feelings of Connecticut’s ruling class.

In “Lamont eyes emergency budget cuts, even as reserves swell,” Phaneuf notes 1) that the reductions are minor rescissionary cuts, and 2) that the deficit Governor Ned Lamont seeks to reduce through his rescission authority represents a piddling “0.1 percent of the General Fund.” Phaneuf notes, “Ned Lamont has also recently raised the specter of emergency budget cuts — something his predecessor did frequently to the consternation of the General Assembly.”

The “specter” of long-term permanent spending cuts freezes the marrow in the bones of Connecticut’s improvident, big-spenders. “Be bold, be bold,” the brave redeemer is told in the fairytale, “but not too bold, lest the marrow of thy blood run cold.”

The Democrat dominated General Assembly may in the past have raised concerns over the use of former Governor Dannel Malloy’s rescission authority, but this consternation, one suspects, was largely for show. In using or misusing his authority to cut spending by dictate, Malloy was relieving his fellow Democrats from the necessity of making significant cuts whenever repeated deficits appeared on the horizon. In some cases the deficits were due to misleading and over-optimistic revenue projections. Then too, the Democrat dominated General Assembly was used to shifting funds out of mistitled “lock-boxes” to the general fund in order to cover marginal deficits, which leaves holes, to be back-filled later, in the pilfered accounts.

Connecticut’s spendthrift legislature has many times shown itself uninterested in doing what legislatures are constitutionally obligated to do – finance obligations through general fund revenue and avoid driving taxpayers, future revenue, from the state through excessive taxation. If one rules out financing future debt through punishing tax increases, only one curative course remains – cut spending. And progressive Democrats are, for obvious reasons, loathed to cut spending, thereby alienating pampered special interests, mostly state employee unions, that regularly contribute to Democrat reelections to office.

It has been said that the American Republic will endure until the day Congress discovers that it can bribe the public with the public's money.


In “seeking to bribe the public with the public’s money,” the bribers always have many more than four aces up their sleeves. Cleverly presented political deception involves making the public think it is receiving a benefit, when in fact the received benefit is slight and does not answer the political problem for which the “benefit” is a prescriptive cure. And the cost of the benefit, of course, always is many times more expensive than it is worth.

Lamont, CTMirror notes, is using his emergency powers to make negligible cuts in spending while sitting on a massive nest egg: “Lamont is taking aim at the $28 million deficit projection even as analysts estimate a new savings program in the current budget holds a $318 million windfall. In other words, under old budget rules, instead of a $28 million deficit projection, Connecticut would be anticipating a $290 million surplus.”

Where, then is the emergency?

Lamont would say that the nest egg is insurance against an anticipated recession. Most economists would agree that, while there may be a bump in the road in 2020, there will be no recession. “For the time being,” The Motley Fool advises, “the longest economic expansion in U.S. history looks poised to continue.” Statistics show that “since 1945, the average recession in the U.S. has lasted less than one year.”

But not in Connecticut. The state has yet to recover jobs lost during the Great Recession, which ended in June 2009. Here in the land of steady habits, recessions last 10 years and more, possibly because Connecticut is used to partially paying down debt – or not – through tax increases, which prolong recoveries. The state is carrying on its shoulders a massive state worker pension debt. Service on the debt now accounts for 13 percent of Connecticut’s annual budget, or $2.9 billion in 2019, according to the Office of Fiscal Analysis. And service represents a “fixed cost” that cannot be immediately reduced through legislative means. The reduction of future fixed costs is certain to arouse the antipathy of state worker unions whose members recently flooded a Town Hall in Westport’s Bedford Middle School to cheer on toll taxes.

The Town Hall meeting, packed with union workers, was co-sponsored by newly installed State Representative Will Haskell, who assured everyone that that the toll tax was a user fee, not a tax. The toll tax is in fact a consumption tax that will be paid not by truckers, who operate as tax collectors, but by consumers of goods and services who will pay the tax in higher prices. Haskell’s truck only “user fees” will fall most crushingly not on his District 26 constituents, but rather on poor people who have not the advantage of living in toney Redding, Ridgefield, Wilton, Westport, and New Canaan.

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