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Tuesday, January 09, 2018
Red Notes From a Blue State - What Connecticut Can Learn From History
Connecticut, as everyone who has been leaving it knows, is
in a bad way. How bad is it?
The state is still recovering from a recession that had ended
elsewhere in the nation in June 2009. For eight years, we have been hobbling
along and are now the only state in the nation that has yet to recover from the
recession – which is, as everyone who has been leaving the state knows, a slowdown
in business activity. There are two very good reasons why Connecticut has been
so laggard: 1) Governor Dannel Malloy’s first tax increase, the largest in
state history, and 2) Governor Malloy’s second tax increase, the second largest
in state history.
But then, we were forewarned. Lowell Weicker did caution us during his
campaign for governor that raising taxes in a recession would be like throwing
gas on a fire, only a few months before he instituted his income tax, over the heated
objections of a Republican Party rump in the General Assembly. When Weicker was
met by the largest rally in state history, he fearlessly strode through the anti-tax
crowd, a triumphant smile pasted on his face. Awaiting him at the state Capitol
was his Office of Policy Management chief, Bill Cibes, who had run for governor,
honestly, on a pro-income tax platform and had been solidly rejected.
The Weicker income tax convinced businesses outside the
state that they had better think twice before they moved to Connecticut, where
they and their employees would no longer be safe from rising taxes. And
business within the state – realizing that the cost playing field had now been
leveled between, say, New York, Massachusetts and Connecticut -- began looking
for the exit signs. We are now living in the flames stoked by Weicker and
Malloy. During this period, one could hear sighs issuing from wiser heads: if
only these two knuckleheads had listened closely to President John Kennedy’s address to the New York Economics Club in 1962. It was during that address that the King of Camelot vowed to cut taxes
to spur business activity, which would flood the national treasury with
necessary tax receipts. He did this, and the results were as he had supposed.
Truisms are powerful because they are true. Those who do not
learn from history are doomed to repeat the mistakes of history. The Weicker
tax did two things; it saved spendthrift Democratic legislators in the General
Assembly the trouble of cutting costs permanently, and it raised revenue
temporarily by draining dry the well that replenishes state revenue. Malloy
repeated the errors of the Weicker administration – twice, and his tax
increases have led, unsurprisingly, to increased spending, business flight and
The real wealth of a state resides in its people and
businesses. For the last quarter century, Connecticut has witnessed a flow of
wealth from the private to the public sector and from Connecticut’s
increasingly progressive and redistributive public sector to pampered special
interests, such as state workers, that benefit the politicians directing the
flow of wealth. All this hums along until, to quote Prime Minister of Britain
Maggie Thatcher, “you run out of other people’s money,” at which point your
choices are severely diminished. Unable to raise taxes without destroying the
real wealth of the state, you MUST reduce expenditures, and the reductions must
be permanent and long term – because diminishing tax resources have become
permanent and long term.
So, what do you do under these circumstances, if you are a
progressive majority in the General Assembly? You capitulate temporarily to
reality, always a tough taskmaster, cross your fingers and hope that President
Donald Trump’s economic reforms, barely indistinguishable from those of John
Kennedy, will succeed in lifting all the boats, including Connecticut's sinking
Titanic, at which point you may return to political business as usual.
Author Don Pesci
And what do you do if, faced with such a bleak future, as you
are Malloy? First, you decline to run for office again . . .
To read the rest of Don's commentary, visit his web site.