States – Connecticut in particular -- should avoid deficit spending whenever possible for the same reason Mr. Micawber in Charles Dickins’ David Copperfield suffered misery because he had failed to keep his eye on personal debt.
If a man had twenty pounds a-year for his income, and spent
nineteen pounds nineteen shillings and sixpence, Micawer tells us, he would be
happy, but if he spent twenty pounds one he would be miserable -- and committed
to a debtors’ prison. Dickens’ father was committed to such a prison. The
Debtors' Act of 1869 limited the ability of the courts to sentence debtors to
prison, a sign that such prisons were slated for abolition.
What we might call the Micawber principle never-the-less
still stands as an ominous warning to both persons and states.
Although the state of Connecticut is sitting on a massive
accumulative state pension debt of some $35 billion, most of the chatter in our
media concerns the state’s biennial “surplus.”
The Yankee Institute told us in a 2021
report: “As Connecticut prepares to make a historic $1.6 billion payment toward
its unfunded pensions, a new report shows Connecticut has the highest taxpayer
debt of any state in the nation.
“According to Truth in Accounting’s annual Financial State
of the States 2021 report, Connecticut’s overall debt increased in 2020,
leaving each taxpayer with an overall state debt burden of $62,500.”
A more recent report in CTMirror tells us: “[Democrat
Governor Ned] Lamont has been reluctant to commit anything more than the rainy
day fund to solve all challenges facing Connecticut’s finances. He prefers to
use the projected surplus to continue whittling down the state’s considerable
pension debt, which topped $35 billion
entering this fiscal year [emphasis mine]. Pension burdens, created by inadequate funding between 1939
and 2010 [emphasis mine], are projected to continue to strain state
finances well into the 2040s.”
“Inadequate funding” is a polite way of saying that, while
Connecticut’s state government continued to accumulate pension and state
employee benefit debt from 1939 through 2010, payments were not made on
the debt. If Connecticut had a debtor’s prison, those responsible for our
gargantuan debt would today be cooling their heels behind prison gates.
Democrat leaders who control the General Assembly – by a
nearly veto-proof margin -- are now worried that prospective savings initiated
by the pinch penny administration of President Donald Trump will prospectively
reduce the state’s federal tax take. Inflation – i.e. a reduction in the
purchasing power of the dollar owing to excessive federal spending and
borrowing – continues to erode state and national revenue intake as well,
though this threat has not has a moderating effect on spending and borrowing.
Spending, Connecticut Commentary noted, is the new “political sin that
dare not speak its name.”
Connecticut’s accumulative debt is the equivalent of
economic Hell. The spending cap initiated several years ago is holy water
dripped into Hell.
And, considering an accumulative debt of $35 billion, it
seems indecent of spendthrift legislators to congratulate themselves on
spending deferrals that have produced an undernourished “surplus” of $2.3
billion. One may well ask, “What surplus?”
CTMirror tells us, “Surging income and business tax receipts will leave
Connecticut with its second-largest surplus in state history, analysts reported
Wednesday, even as officials remained divided whether to use any of the $2.3
billion windfall to mitigate big cuts in federal aid.”
Actually, there are plans afoot among Democrat state
legislative leaders who created the state’s $35 billion pension debt to reduce
the state’s $2.3 billion “windfall surplus” to mitigate “projected big cuts in
federal aid.” Projected revenue from Connecticut’s sales and business taxes in
the next few years, CTMirror tells us, are flat. State analysts and
neo-progressive Democrat legislators such as Senate President Pro Tem Martin Looney heartily agree.
“House Speaker Matt Ritter, D-Hartford, and Martin Looney,
D-New Haven, both appealed to Lamont recently to carve out a portion of this
fiscal year’s surplus to mitigate likely losses from Washington,” CTMirror
tells us. “The state has a $4.1 billion rainy day fund equal to 18% of the
General Fund, but Democratic leaders say much of that could be spent in the
next two years if the nation slips into a severe recession.”
Cutting Connecticut’s accumulative debt is a simple matter.
States and people cut debts by cutting spending or increasing revenue. When King Louis XVI, the last Bourbon king of France, sought to
discharge his state debt by increasing taxes in Paris, he lost his head in the
process – and his kingdom. The principal lesson of the French Revolution has
not been lost on present day neo-progressive Connecticut legislators. The only
alternative solution to runaway spending is to cut spending and risk alienating
powerful Democrat supporters.
Powerful majority Democrats have so far had it both ways. They
agreed, reluctantly, to institute a spending barrier – the so called cap on
spending – and are now in the process of doffing the cap, citing fearsome future
projections. But common sense tells us that a cut in spending barriers
represents future spending and tax increases.
Connecticut voters may be revolutionary enough to figure it
all out, at which point we may have our own revolution without French tumbrils
and guillotines.
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