Malloy’s Carrot And Cattle Prod

Politically, Governor Dannel Malloy could not afford yet another union “No” vote on his revised budget plan and, accordingly, the leaders of state unions have been more or less laying down the law to rank and file union members.

Some pro-union Democrats, Jonathan Pelto among them thought the governor had been wielding his big stick a bit too exuberantly. Mr. Malloy’s Plan A, rejected by the union rank and file, was generally regarded as being soft on sacrifice, a point emphasized by union leaders in a memo to rank and file workers sent out prior to the vote affirming Plan A2.

Mr. Malloy’s “clarified” plan following the disappointing union vote is, according to the memo, an agreement that guarantees union members security:

“We would receive four years of job security, an extension of our health care and pension plans to 2022, an irrevocable trust fund to insure there will always be retiree health care, three years of wage increases, a reaffirmation of the independence of the state employee health plan, and contract protection lasting through 2016. Additionally, all of the layoffs, anti-union legislation, and faculty/office closures would be reversed.”

Not a bad deal there, considering the sacrifices unions in other states have been forced to make in the interests of balanced budgets. Additionally, the union memo warned rank and file members, “there is legislation pending on the House calendar that would limit collective bargaining, with the goal ultimately of taking away our ability to bargain over health care and pensions.”

If Mr. Malloy’s initial plan had been long on carrot, the propaganda effort launched by union leaders in concert with Mr. Malloy to persuade their rank and file members to accept a slightly revised Plan A was, many political commentators might agree, equally long on stick. Even dyed in the wool union collaborators in the General Assembly considered Plan A beneficial to union interests, as witness Senator Edith Prague’s astonished gasp upon its rejection. Mrs. Prague -- and other ardent union defenders in the General Assembly, among them Speaker of the House Chris Donovan and President of the Senate Don Williams -- is to union interests what General George Patton was to the Third Army during the Second World War.

Union leaders, working hand in glove with Mr. Malloy, were determined to steer Plan A2 past rank and file union naysayers, and for this reason both union leaders and Mr. Malloy belabored labor with a big stick. Union by-laws were changed to accommodate a “Yes” vote. And though “the world has changed since even a few weeks ago,” as the union memo proclaimed, the leaders of some union units had decided they would not allow rank and file members who previously voted Yes on Plan A to change their votes. The Malloy administration, using the union communications pipeline, announced prior to the vote that negligent union members who vote No on Plan A2 would be subject to sanctions: their jobs will not be secure. Job security could only be achieved by voting “Yes” on the revised plan.

Legislative leaders had also pulled mightily on the oars. Over the muted protestations of reliable union supporters in the General Assembly such as House Speaker Chris Donovan, Mr. Malloy had asked the General Assembly for extraordinary rescission authority that would give him the power to lay off workers to meet his budget goals. That rescission authority could be applied to balance the books – even after Mr. Malloy’s Plan A2 had sailed past whipped union rank and file members.

The possibility alarmed pro union legislators such as Senator Toni Harp, for five terms a leader of the budget-writing Appropriations Committee, who had suddenly discovered the doctrine of the separation of powers months after the Democratic dominated General Assembly had approve a budget that was, prior to the union vote, billions of dollars out of balance.

Although Mr. Malloy’s slightly revised Plan A was this time overwhelmingly affirmed by rank and file state union members by a vote of 25,713 to 9,291 – Given the electric cattle prods used by Mr. Malloy as inducements to change votes, how could the plan fail to pass? – there are some loose ends to be tidied up. A claim before the State Labor Department filed by Lisa Herskowitz, a senior assistant state's attorney in Manchester, that the SEBAC state labor union leadership had no legal authority to negotiate wage concessions for the 15 state labor unions and no authority to change the bylaws when the deal was rejected may prove to be a thorny problem.

Should Ms. Herskowitz’s suit reach the courts, pity the judge who must decide it. Mr. Malloy’s cattle prod is fully charged and he is on speaking terms with newly reappointed Chief State’s Attorney Kevin Kane.

Actuarial Doubts

“There are three kinds of lies: lies, damned lies, and statistics” – Benjamin Disraeli

Actuarial figures supporting claimed budget savings in Plan A2 -- son of Plan A, a slightly revised budget that Governor Dannel Malloy months ago submitted to the General Assembly for approval -- have been called into doubt for some time.

The Malloy budget approved by the Democratic controlled General Assembly early in May, for instance, contained a savings line that could not be actuarially verified. The Malloy budget simply assumes a savings of $270 million arising from a commitment from state workers to devise ways of saving money.

When Republican leaders -- who have been successfully cut out of the budget negotiation process by Mr. Malloy and Democratic leaders in the General Assembly – questioned the assumptions that underpinned the projected savings, Malloy communications director Colleen Flanagan intemperately responded that the figures had been verified by their actuaries and they were accurate – “period!”

But there are few periods in politics, and one budget exile, House Minority Leader Lawrence Cafero, has now bravely questioned what Mr. Disraeli most certainly would call a damned lie.

Period? Seems more like a question mark, Mr. Cafero mused after a letter written by Malloy budget chief Ben Barnes began to circulate through the political grapevine.

Mr. Cafero noted  that “Office of Policy and Management (OPM) Secretary Ben Barnes contradicted claims that savings included in the $1.6 billion state employee union concessions package had all been verified by actuaries” in a letter Mr. Barns sent to State Senator Andrew Roraback.”

In his letter to Mr. Roraback, Mr. Barnes sought to “correct what must be a misunderstanding about Ms. Flanagan's statement.”

The review conducted by Mr. Malloy’s actuaries, Mr. Barnes wrote, centered upon “the health benefit plan design changes, and the changes to plan design and eligibility for the State Employee Retirement System (SERS)… Other savings in the agreement reflect commitments between SEBAC and the State to identify operational, contractual, and efficiency‐related savings in the areas of technology, healthcare contracting (under the terms of the existing plan of benefits), and other operational savings. These particular commitments to achieve savings were not actuarially determined, because they are not savings of an actuarial nature [Italics mine]. Nevertheless, they reflect a commitment between the State and our employees, and more importantly between the Governor and the people of Connecticut, to reduce the cost of government this year and into the future.”

Noting that Mr. Barnes “rather clearly states only two areas of the plan were verified" by Malloy hired actuaries, Mr. Cafero offers a “period” of his own: “This means two things, and they are both important: First, the governor's office has been less than factual in their wholesale assurances of actuarial reviews. Second, the question still persists - how will we achieve these projected savings, and what will we do if they can't be realized?”

The Democratic controlled General Assembly last May approved over the protestations of Republicans a budget that was dependent upon an affirmation from SEBAC, the union coalition authorized to negotiate contracts with the Malloy administration, that never materialized. State union worker rejected Plan A. Leaders of SEBAC, yielding to strong suggestions made by the Malloy administration, then unilaterally changed union by-laws to insure that a future vote would not incommode Mr. Malloy, his administration or supportive Democratic leaders in the General Assembly – principally Senate President Don Williams and Speaker of the House Chris Donovan, who recently announced he is running for the U.S. House in the 5th District.

And now, on the eve of what some consider a fixed vote, rank and file union members are poised to affirm a budget that relies on savings that cannot be verified by the General Assembly’s own Office of Fiscal Analysis.

Responding to Mr. Cafero’s concerns, Malloy senior advisor Roy Occhiogrosso was every bit as terse as Ms. Flanagan. None of Mr. Malloy’s agents can rightly be accused script deficiencies; they are always on the same page.

“Let's be honest,” Mr. Occhiogrosso retorted, “What's bothering Rep. Cafero and his Republican colleagues is that if all this comes to pass it'll be a Democratic Governor who achieves this historic restructuring of the relationship between the state and its workforce, not a Republican. It's sour grapes on their part - nothing more, nothing less.”

Period.

Malloy’s Way

Democratic governors, Jim O'Sullivan of National Journal writes, “argue that their approach is easier for their constituents, as both taxpayers and consumers of government services, to stomach,” largely because they are simpatico with unions. “In most cases, with cozier relationships with unions, they’ve approached the labor contract legislation as a collective-bargaining exercise, bringing union leaders into the process.”

Governor Malloy figures prominently in the National Journal story. Mr. Malloy, “repulsed” by budget cutting tactics in Wisconsin and New Jersey, has charged other governors with “scorched-earth, unilateral governing,” according to the National Journal. The news story does not mention Democratic Governor Mario Cuomo as one of the scorchers, and one assumes Mr. Malloy has not identified him as such, although the New York governor managed to put his budget to bed without raising taxes, for reasons of Democratic comity.

“Malloy took office,” Mr. O’Sullivan writes, “with a roughly $3.5 billion deficit, the largest per-capita shortfall in the country. ‘We cut, we sought concessions, and we raised taxes. That’s what we did,’ he [Mr. Malloy] said. After his initial benefit-trimming package—including a two-year wage freeze and increased contributions for health care and pension plans—was voted down by unions, labor leaders lowered the threshold for approval. Those deliberations are still pending; Malloy expects to learn the results by August 18. The plan, he said, would save $1.6 billion over two years, and $21.5 billion over 20 years. If labor rejects the deal, additional layoffs and $700 million more in cuts will take effect, he said.

“’When in doubt, collaborate,’ Malloy said. ‘Or always be in doubt and collaborate.’”

One hardly knows where to begin. Mr. Malloy’s collaboration, it should be obvious by now, was not with Republican leaders in Connecticut’s General Assembly. From the very beginning of budget deliberations, Republican legislators were deliberately frozen out, rather as if  Mr. Malloy had been intent on pursuing a scorched earth policy against his political opponents. Mr. Malloy won election over Republican candidate Tom Foley by a narrow margin in cities where unions routinely turned out votes for Democrats, and the governor’s budget collaboration was with the leaders of SEBAC, a union coalition authorized to bargain collectively on health  care and pensions– not Republicans.

It is generally agreed in Connecticut that Mr. Malloy’s first budget, Plan A, was a boon to unions when compared with Mr. Malloy’s alternative budget Plan B. Initially, Mr. Malloy sought to wrest $2 billion from state union workers as a part of his “shared sacrifice" agenda. Even within the union universe, Mr. Malloy’s sacrifice was not shared among union members in the state’s municipalities. Mr. Malloy’s shared sacrifice was limited only to state union workers, and the burdens placed on SEBAC were much lighter than those imposed on a wider swath of unionized workers under Plan B.

Plan A came to grief when rank and file members of SEBAC, pointedly rebuffing union leaders, rejected the package. Upon the rejection of Plan A, SEBAC negotiators began collaborating with the Malloy administration to overturn the disappointing vote. Mr. Malloy had at the ready Plan B, which was to contract negotiations what a howitzer is to diplomacy by other means. While the Malloy administration sent out Plan B layoff notices to union workers, union negotiators – the same crew that failed to sell Plan A to rank and file members of SEBAC – pumped out propaganda sheets warning any members who might consider rejecting a slightly altered Plan A2 of the perils that would most certainly would befall them should they not relent and vote in favor of the more mild plan. So, far Mr. Malloy has sent out 3,000 pink slips, almost all of which will be withdrawn after Plan A2 is approved. None of the $1.6 billion in tax increases will be rescinded.

After the Democratic dominated General Assembly voted to accept the Plan A budget -- which was approximately $2 billion out of balance and relied on as yet unrealized savings – Mr. Malloy asked the General Assembly to increase his rescission authority from 5 to 10 percent, so that he might unilaterally cut budget expenditures that legislators had supposed were in balance months earlier.

Some legislators in the General Assembly are loathed to share their constitutionally authorized legislative powers with the governor.

"I know it's uncomfortable to deal with the Legislative Branch, that it's inconvenient," said Toni Harp, the Democratic co-chairwoman of the Appropriations Committee. "But that's our system of government.”

In New York, New Jersey and Wisconsin budget messes such as this already have been settled – to the satisfaction of taxpayers. Budgets there have been put to bed. In Connecticut, the budget yet has miles to go before it sleeps. SEBAC, Connecticut’s fourth branch of government, is due to conclude its vote on the budget on August 18.

Yankee Institute vs SEBAC, Final Round

Attorney General George Jepsen having investigated a charge made to his office by SEBAC, a coalition of unions the membership of which soon will be voting either to adopt or reject Plan A 2, that the Yankee Institute had used state the state’s e-mail system to communicate with union workers, the attorney general found that the charges against the institute were false. The comprehensive investigation by two state agencies, the attorney general’s office and the state Auditors of Public Account, Mr. Jepsen wrote in his finding, “did not show that the state e-mail system was improperly accessed or compromised in violation of state laws or policies.”

“As part of our inquiry,” Mr. Jepsen wrote, “we reviewed the e-mails sent to state employees and provided by SEBAC. The first e-mail, containing the subject line 'VOTE No twice on concessions… pass it on' was sent on May 24, 2011 at 8:07 pm from 'Lawrence Jones' to a state employee. The second e-mail, containing the subject line ‘http//votenotoconcessions.com,’ was sent to a state employee on June 13, 2011 at 8:07 pm from 'Daniel Luciano.' Neither Lawrence Jones nor Daniel Luciano is listed on the state’s central financial and administrative computer system (CORE-CT) as a state employee. Neither of these two e-mails originated from State of Connecticut internet protocol (IP) addresses. Each originated outside the state e-mail system and reflected a Yahoo e-mail address. The e-mails were sent to IP addresses leased by the State of Connecticut. State information systems security personnel informed us that the e-mails were not sent from within the state system, and there was no evidence that the safeguards in place to protect the state’s network from hackers or other intrusions were compromised or altered to permit or facilitate the transmission of these e-mails.”

Mr. Jepsen is to be lauded for not having allowed the leaders of SEBAC to use his office as a political tool for the purpose of discrediting the institute on false charges that, had they been sustained, might have succeeded in drawing public attention away from SEBAC’s botched attempt to convince rank and file union members to vote in favor of Governor Dannel Malloy’s doomed Plan A.

The same union leaders who falsely accused the institute of illegalities recently unilaterally changed union by-laws so that a previous vote on Plan A would once again be voted upon under circumstances more favorable both to Mr. Malloy and SEBAC negotiators, causing one commentator – yours truly – to note that SEBAC, having found it impossible under the old by-laws to fix a vote, had discovered a way to fix the voting process to its advantage. This kind of transparent attempt to fix a vote could only succeed if union leaders were to spew out a cloud of skunk scent to distract public attention from their own dramatic failings. The Yankee Institute, and more especially Zach Janowski, the institute’s investigative reporter, were convenient scapegoats upon which SEBAC leaders sought unsuccessfully to pin their own too obvious failings.

SEBAC’s objections to Mr. Jepsen’s finding were amusingly predictable. Leaping over the results of Mr. Jepsen’s exhautive examination, SEBAC lamented that the architecture of the state’s e-mail system “is apparently arranged so that outside groups can get around inadequate software restrictions and distribute emails through the system without being in violation of computer hacking laws -- and apparently without even being subject to detection” – and never mind that Mr. Jepsen found no instance of the state’s email having been hacked by the institute. SEBAC then noted that the institute’s political interests include “producing painful job cuts and ‘downsizing’ state government, which is really just code for privatizing public services.” In fact, Mr. Cullen has noted that the institute favored Plan A  – the very same plan promoted by SEBAC union leaders – over Plan B, which recently has been implemented by Mr. Malloy and includes painful cuts. No doubt the institute, along with many governors and legislators, favors the privatizing of public services as a means of controlling unsustainable costs. SEBAC’s objection to the institute’s view on privatization might have been more justly urged in a letter to the editor; SEBAC thought it rose to the level of a crime and engaged the attorney general as an instrument to harass and punish an organization for having taken advantage of its constitutional right disagree with the leaders of SEBAC.

Yankee Institute Director Fergus Cullen commented following Mr. Jepsen’s finding, “Making reckless accusations without a shred of evidence damaged the union's credibility. Rank-and-file state employees deserve better for their dues than the stunning incompetence of union staff throughout the concessions ratification process."

Mr. Cullen made his comment but a few hours before he had been told by Trinity College that the institute was being given the boot or, as Mr. Cullen, whose sense of humor is unfailing even in trying circumstances, preferred to put it – being expelled – from the Trinity College campus in Hartford where, for the past 13 years, the institute has stoutly defended educational institutions, private enterprise and constitutional rights more often miss-cited than observed by its detractors. It is not known what part SEBAC or union friendly legislators may have played in the institute’s unexpected expulsion from Trinity.

Assistant State Attorney To Argue That Malloy-SEBAC Agreement Violates SEBAC By-Laws

Even before the votes are cast by state union members on Governor Malloy’s slightly vevised Plan A, Lisa Herskowitz, a senior assistant state's attorney in Manchester, has issued a complait to the state Board of Labor Relations questioning the proposed agreemment, according to a story in the Connecticut Post:

“Herskowitz in her complaint to the labor board alleges SEBAC violated its own bylaws by agreeing to a two-year wage freeze, arguing the coalition's negotiating authority is limited to pensions and health care.

“She further argues SEBAC should not have reopened the existing pension and health-care agreement, which expires in 2017, without allowing union members to first vote to authorize SEBAC to renegotiate the deal. Rank-and-file approval should also have been sought in early July when SEBAC approached Malloy about reopening talks, Herskowitz said.”

The board has agreed to address the matter on August 3.

How We Got Here And Why We Aren’t Going Anywhere Fast

Governor Malloy’s “shared sacrifice” was never evenly – some might say “fairly” -- distributed. Progressive Democrats, in fact, do not believe in shared sacrifice. Their credo includes, on the tax side, a progressive income tax in which the “rich,” defined as anyone making more than $200,000 per year, pay the lion’s share of governmental “investments.” SEBAC negotiator Dan Livingston is typical of the genus.

In a progressive regime, the majority of people “invest” relatively little in their government and prudently vote for Democrats, who collect little from them in tax payments (AKA “investments”) while showering them with benefits. Whatever name one chooses to put to this lopsided getting and spending process, it is not “shared sacrifice.”

Nationally, the wealthiest 1 percent of the population earns 19 percent of all income and pays 37 percent of the federal income tax, a figure that excludes payroll taxes for Social Security and Medicare. The top ten percent pay 68 percent of the tab. The bottom 50 percent, those below the median income level, earn 13 percent of the income and pay 3 percent of the tax.

Combining payroll and income taxes, a Brooking Institution study offers the following breakdown: The richest 1 percent pays 27.5 percent of the combined burden, the top 20 percent pay 72 percent, and the bottom 20 percent pay just 0.4 percent. The bottom quintile is low because an earned income tax credit reimburses some or all of their 15 percent payroll tax. In Connecticut, low income groups pay little or no taxes and will be eligible shortly for a newly instituted income tax credit.

The opposite of a progressive tax, a flat tax, which does provide equity in tax collections, would more fairly share the sacrifice; nearly everyone would pay the same tax rate, all exemptions would be eliminated, the simplification of the tax code would facilitate payments, and a majority of the citizenry would be invested, both as tax providers and consumers, in their government.

Mr. Malloy began his journey as governor promising transparency in government, an end to budget trickery, and shared sacrifice. On the route to government as usual, he bumped into a General Assembly dominated by caucus leaders who for years had been politically wedded to union causes, a group of union negotiators who failed miserably in selling Mr. Malloy’s Plan A to rank and file union members, and a gang of crying mayors who winked at the glowing tax faggots so long as they were assured they would not be burned at the stake. Mr. Malloy also entered into an amusing spitting contest with New Jersey Governor Chris Christie, who is turning out to be much the better demagogue.

The Opaque Budget process

Transparency in government was the first casualty of what Democrats in the General Assembly call the “budget process.” Minority Republicans in the General Assembly were from the first cut out of the process, which should not have surprised Republican leaders in the legislature, and the budget was fashioned, per usual, behind closed doors.

There were reasons why the legislative closed shop should not have surprised Republican leaders in the General Assembly. Over a period of twenty years and more, Republicans had lost their primacy of place on the budget chessboard. Republican presence in the legislature is light. The Republican Party in Connecticut lost the last of its budget bargaining chips upon Mr. Malloy’s election to office, more than 20 years after the last Democratic governor, Bill O’Neill, had abandoned ship, leaving in his wake a deficit of about $1 billion, a modest deficit by today’s standards.

Mr. O’Neill was supplanted by maverick Independent Governor Lowell Weicker, the father of Connecticut’s income tax. Mr. Weicker was followed in office by Republican governor John Rowland, who spent a year in jail for having failed to provide “honest services” to the citizens of Connecticut. Mr. Rowland was succeeded by his politically bland Lieutenant Governor, Jodi Rell, a lady more sinned against than sinning regularly lampooned by both the Democratic opposition, the state’s left of center media and recently self described “turd in the Republican Party punchbowl” Mr. Weicker as an inoffensively pleasant do-nothing placeholder. Both Mr. Rowland and Mrs. Rell were moderate Republicans.

After Mrs. Rell came the Democratic deluge. While weary taxpayers gave the boot during the mid-term elections to Democratic big spenders in federal, state and gubernatorial office across the fruited plains, progressive Democrats in Connecticut hung in there. Republican gains in Connecticut’s General Assembly were modest. Before leaving his position as Republican Party Chairman, Chris Healy noted that Republicans had gained 15 seats in the House and 2 seats in the Senate. Republicans also held 100 of the top positions in the 169 towns in Connecticut but lost the governorship and all constitutional offices.

Upon Mr. Malloy ascension as governor, the state, so it was said, had lost its “firewalls,” Republican governors who presumably stood in the way of the Democratic General Assembly spending machine crying “Stop!” In fact, with the righteous wind of an income tax at their backs, spending in the General Assembly quickly accelerated, tripling within the tenure of three post-income tax governors. By the time Governor Dannel Malloy arrived at the fire, Connecticut was engulfed in spending flames. The state had accumulated a biennial budget deficit of more than $4 billion. Something had to be done.

Mr. Malloy’s solution to Connecticut’s debt problem did not differ markedly from that of Mr. Weicker or the two Republican governors who followed him. Mr. Rowland’s campaign pledge to repeal the income tax did not survive his first week in office. While governors in Connecticut’s neighboring states of New York and New Jersey held the line on taxes, Mr. Malloy, following a campaign in which he was hoisted into office by a slender margin of 6,500 votes and during which he seemed to spurn the imposition of more taxes as a first response to Connecticut’s red ink immediately increased a host of taxes by $2.6 billion and pledged to wrest about $2 billion in savings from state unionized workers.

There Will Be Time, For Visions And Revisions That Time Will Soon Erase

Very nearly all the decision makers in Connecticut – union leaders in SEBAC, the coalition of unions charged with contact negotiations, Mr. Malloy and his negotiating team, many liberal lawmakers in the General Assembly and Malloy administration well-wishers in Connecticut’s left of center media – were agreed that Plan A was favorable to unions.

Plan A assured $2.6 billion in tax increases, imposed a wage freeze on state workers for two years, after which the unionized workers were guaranteed wage increases of 3 percent for the following three years, and launched a medical benefit plan that cut costs and, so it seemed to some – one of the chief sticking points among union workers who gave a thumbs down to Plan A – reshaped benefits so that the new medical benefits package could in the future accommodate Connecticut’s Sustinet Plan, a state version of President Barack Obama’s universal health care plan.

Should Plan A be rejected in a final union vote, Mr. Malloy had at the ready an alternative Plan B that, said the same cheering section vigorously promoting Plan A, would be devastating to state workers. On the question of further tax increases, should state workers be so foolish as to vote down Plan A, Mr. Malloy had already crossed a Rubicon: He had pledged to all and sundry that he would not make up cost savings lost through a rejection of Plan A by further tax increases. Savings lost through a perverse refusal to adopt Plan A would be recovered through draconian layoffs and agency reorganizations.

As a lure to union members who might foolishly vote down Plan A, Mr. Malloy sweetened the pot by reducing the “shared sacrifice” of union workers by $400 million. Mr. Malloy’s number crunchers found an extra $400 million in budget receipts and used it to offset union contributions to the so called “shared sacrifice” the governor had demanded of both taxpayers and state workers. An artificial surplus of about $1 billion had been tucked into the budget, a portion of which Mr. Malloy used to finance an ambitious upgrade of the newly unionized UConn Health Center. Democrats did not propose to share their new found funds equally between tax payers and union members by splitting with taxpayers the $400 million Mulligan the Malloy administration had given outright to union members, possibly hoping the additional funds would induce members to vote in favor of Plan A.

The Democratic dominated General Assembly, Republicans dissenting, pre-approved the budget before the Malloy administration had secured union concessions because, some speculated, individual legislators did not wish to leave their fingerprints on a budget deal gone sour.

Were he alive and singing in these unhappy days, Robert Burns, author of the lines

The best laid schemes o' Mice an' Men,
Gang aft agley, (Often go astray)
An' lea'e us nought but grief an' pain,
For promis'd joy!

might have felt vindicated as a philosopher and poet; for, sure enough, the incomprehensible happened, and state union members rejected Plan A, after which Mr. Malloy rolled out the guillotine.

Plan B, everyone agreed, was a horror. It enforced real cuts in spending but likely was never intended as more than a pistol held to the head of rank and file union members to induce them to vote for the much milder Plan A, which included two years of wage freezes followed by 3 years of 3 percent wage increases, a two year increase in the retirement age and a doubling of the pension penalty should workers decide to retire early. Plan A also included an insurance feature mandating doctor visits and screenings, in exchange for which the state offered a pledge not to lay off current workers, all mild adjustments by most people’s reckoning.

When a minority of union workers rejected Plan A, Mr. Malloy was more or less forced by the weight of his rhetoric to pull the trigger on the pistol.

Plan B, a veritable spook on a stick, was unveiled; the usual culprits remonstrated with benighted union workers. Senator Edith Prague, a longtime union enabler in the General Assembly, said she thought those who had rejected so mild a plan were mad. Papers that in the past stood idly by as the state budget doubled and then tripled, insisting that Connecticut had a revenue rather than a spending problem, began to shriek like so many righteous Robespierres for the heads of union members. The Speaker of the House, Rep. Chris Donovan, put a temporary hold on his run for the U.S. Senate in the 5th District and returned panting to the legislature, where he encouraged union leaders to prevail upon the rank and file to make whatever adjustment might be necessary to adopt the discarded Plan A. Mr. Malloy said he was hopeful something could be done. Flagging spirits began to revive. Slowly, Plan A rose from the ashes.

When the Kabuki curtain opened towards the end of July, painted smiles were on every face. Union leaders, with a wink in the direction of rank and file members they were supposed to be representing, changed the by-laws governing contract negotiations – “drastically,” according to Chris Keating of the Hartford Courant.

Under the old by-laws, “14 of the 15 unions – representing 80 percent of the membership – needed to approve any changes to ratify changes in health care and pension benefits.” That is why Plan A, although approved by 57 percent of those voting, was rejected under union by-laws. Under the new and revised by-laws, imposed upon the membership unilaterally by the very negotiators who had failed to induce a sufficient number of workers to vote in favor of Plan A, “only 8 of the 15 unions – representing 50 percent of the membership [would be] needed to approve any changes,” according to Mr. Keating.

And as if this staged re-vote on Plan A were not surety enough that Plan A finally would be accepted, some news reports indicated union leaders were prepared to allow only those votes of union members who had voted against Plan A to be tallied under the revised by-laws, these to be added to the 57 percent of members who had under the old dispensation voted for Plan A. Those who had voted down Plan A would be given a chance to change their votes to affirmative. Those who voted affirmatively under the now abandoned by-laws would not be given the opportunity to change their “yes” votes.

Having been stung once, union negotiators and Malloy officials were determined to leave nothing to chance. Plan A MUST pass.

Unsurprisingly, Mr. Malloy hit pay dirt when SEBAC leaders announced that a deal had been struck on July 23. The plan soon to be submitted to the union membership differed from Plan A only in incidental matters. An impenetrable secrecy shrouded talks between union leaders and the agents of the Malloy administration.

Following the announcement, the State Employees Bargaining Agent Coalition “posted a notice announcing it was taking strict control over its Facebook page, an indication the unions already were trying to take control of messaging once a new tentative agreement is announced,” according to a report in CTMirror.

Outside the closed shop discussions in the course of which SEBAC leaders assisted Malloy administration officials in pushing through the union rank and file a re-do vote that was almost certain to pass frustrations swirled.

The frustrations were understandable said Matt O’Connor, one of the SEBAC negotiators in a Wall Street Journal report. "There may be issues individual unions want to raise with their leaders, but all of the actions by leaders of coalition are all in accordance with our bylaws."

Those would be the by-laws that Mr. O'Connor’s associates at SEBAC unilaterally changed in order to produce an approving vote by the rank and file, who were now prevented by the censors at SEBAC from participating in facebook messaging.

Mr. O’Connor adamantly insisted, according to an Associated Press report in the Times Union, rather in the manner of a Lady Macbeth protesting too much, that neither Mr. Malloy nor his agents played any role in a by-law change without which a re-do vote on Plan A would not have been possible:

"'We didn't give the governor anything,’ O'Connor said. ‘This was a decision made by union leaders based on reviewing the entire ratification process, hearing from the 45,000 members of our unions, applying lessons learned from this experience and following some very basic principles of union democracy. It certainly wasn't about the governor.’"

Of course, the secrecy surrounding the discussions would make it nearly impossible for anyone to verify Mr. O’Connors somewhat implausible version of events. We are to suppose that SEBAC negotiators who dramatically violated every rule of union democracy to achieve a result desired by Mr. Malloy, virtually all pro-union Democratic legislators in the General Assemby and Connecticut’s left of center media “didn’t give the governor anything.”

Following the by-law changes, rank and file discontent boiled over in the pages of the Wall Street Journal:

“Some union members said they're planning to vote against any new deal out of principle. Meanwhile, members of at least two bargaining units are urging their colleagues to disband.

"’AFSCME is a national union and has a lot of power, so it would be nice to stay with them, but if they're not listening to us, then we're going to have to find another union,’ said Jeri Herskowitz, who works in the judicial system.

“She said members of her local have started a process to jump ship and join the United Public Service Employees Union out of Ronkonkoma, N.Y.

"’In the past week, numerous workers in Connecticut have contacted us to leave their union and join ours. We're going to have to move very quickly to make this happen,’ said UPSEU President Kevin Boyle.

“Correction officer John Boyle spent part of the day Tuesday near the Donald T. Bergin Correctional Institution in Storrs offering union members information about joining the National Correctional Employees Unions, which was formed out of Massachusetts. Mr. Boyle, who plans to retire in August, said he is also spearheading a class-action suit against union leaders. He hasn't filed any court papers.

"’Union leaders sold us out, they got caught, and now they're going to have to face us in court,’ Mr. Boyle said.”

No Exit

Such is life in the tax-me, sue-me, flee me state. Mr. Malloy has imposed on his state the highest tax increase in its history, larger even than the tax increase previously imposed by Mr. Weicker in the state’s first post-income tax budget. In the absence of Plan B, which contained real spending cuts too Draconian for the refined tastes of big spending eastern seaboard Democratic politicians, spending will go up. State revenues will spike owing to the tax increases. But over the long term, in the absence of dramatic spending cuts, revenues will continue to shrink, because businesses from which the state draws its revenue will continue to flee the state when they cannot bribe it for tax dispensations, moving jobs and taxpayers to less high tax and regulatory environments elsewhere.

The exodus has already begun. Two days before the union-Malloy deal was announced with much fervor on the front pages of Connecticut’s newspapers, many of which find their own resources shrinking, a report surfaced in a business journal indicating that job additions in Connecticut were anemic: Connecticut has added only 1,800 jobs since the start of 2011, compared with a gain of 14,100 for the same period last year.

And last year was not a banner year.

Iceberg Sighted, Full Speed Ahead

Two reliable economic forecasters, Goldman Sachs and Macroeconomic Advisors, have downgraded their previous economic forecasts, according to The New York Times:

“Two months ago, Goldman Sachs projected that the economy would grow at a 4 percent annual rate in the quarter ending in June. The company now expects the government to report no more than 2 percent growth when data for the second quarter is released in a few weeks.

“Macroeconomic Advisers, a research firm, projected 3.5 percent growth back in April and is now down to just 2.1 percent for this quarter.”

Chief United States economist at Goldman Sachs Jan Hatzius, peering through clouded skies, said he could not rule out yet another recession:

“We’re still a reasonable way off from that,” he said. “But I’m not as confident as I would like to be.”

Connecticut is in the grip of a long hard recession. During the state’s last soft recession, it took about ten years to recover jobs lost, and this was at a time when the federal government was not wading knee deep through a $14 trillion deficit.

To put the matter brutally, Connecticut, first in the nation in per capita debt, cannot rely on an impoverished federal government to throw it a life line should Mr. Hatzius’ shaky confidence abandon him altogether. If the nation does tailspin into a double dip recession, Connecticut cannot and should not expect to be rescued by a morally and economically bankrupt federal regime.

Someone should tell progressives in the General Assembly to prepare for stormy weather. The sun they expect to shine someday will be a long time coming in a state that soon will withdraw about $4 billion from the private economy to finance yet more improvident spending on a busway to nowhere and a costly project in Farmington presumed to rehabilitate – yet again – a UConn Health Center that already has absorbed millions in tax money.

Every dollar drawn in taxes from the private economy is a stimulus dollar lost to private enterprise at a time when the private marketplace in Connecticut is diminishing.

These dollars will be spent by politicians on dubious public works projects that they claim, without blushing, will stimulate the economy. The surplus that solicitous state Democrats have tucked into their as yet unresolved budget package will, as usual, be deposited either in a exhausted “rainy day” fund or flushed into the general fund. Either way, this money will be used, immediately or later, to pay for current expenses. Taking money from the private economy and using it as a so called stimulus is on a par with taking a bucket of water from the deep end of the pool and dumping it into shallow end of the pool; it does not increase the net gallons. And depending upon how the tax money is distributed, the transfer may result in a net loss of revenue.

If investment dollars are spent unwisely in a private economy, the private market punishes poor decisions by driving out of business the business that has made them; and, assuming the business is not propped up by tax dollars, the investors do – and should – lose their shirts. In a public market place fed by tax dollars administered by politicians, tax providers and consumers do not determine the fate of public projects, because there is no nexus that connects the supply of product or service with consumer satisfaction. That is why urban public schools, proven failures, continue merrily along as damaged institutions. That is why the UConn Health Center did not fail when it began to lose tax dollars or, as politicians sometimes put it, “tax investments.”

Once a pipeline is driven by politicians from taxpayer’s wallets to state supported business, their “investments” can only fail when politicians withdraw their support. And, as a general rule, their support depends upon political rather than economic outcomes. Every state financed enterprise, in other words, is fail-proof – provided the business does not lose favor with politicians who are willing to finance it, as usual, with other people’s money. In this kind of a scheme, decision makers are punished by the prospect of non-election, a remote eventuality in a state, like Connecticut, that has been dominated for a decades by a single party.

The remedy for business slowdowns and recessions is to lower the cost of business by reducing taxes and regulation, allow failing enterprises – public or private -- to fail, recover the lost service or product through privatization or increased competition, and depoliticize private markets whenever possible. An approach of this kind will not win politicians many union votes. On the other hand, a plan to save the state that really does save it from drowning in eternal indebtedness would be a vast improvement over Plan A, Plan B or any other silly concoctions the General Assembly may serve up to vex and bedazzle us.

Why The Budget Failed

Plan A failed because neither the Malloy administration nor SEBAC negotiators were able to sell their product to the union rank and file.

Lord knows they tried. But in the end, it was the health package that sunk the final vote. Almost half of the union rank and file voted against Plan A, considered by union negotiators, Malloy administration budget salesmen and a large chunk of Connecticut’s commentariat to be a plan irresistible to rational heads in much of the state.

Moises Padilla, vice president of AFSCME Local 387 at the Cheshire correctional complex, thought early on that Plan A was doomed and made attempts to contact shakers and movers within the Malloy administration to warn them of the impending crack-up, but his calls were not returned by Roy Occhiogrosso, Mr. Malloy’s major-domo.

Following the rank and file vote, which soundly rejected Plan A, union negotiators regrouped and decided the vote would not be formalized for thirty days, later pushing the thirty days out to infinity, a stratagem that can only strike rank and file members of the unions as a means of discounting their vote.

The sticking point, according to Mr. Padilla, is the health care package. Many rank and file members regard changes make by the Malloy administration as an intrusive nose of a universal health care camel, a “social experiment” inserted into a collective bargaining health care plan “in the hopes that it would eventually lead to universal health care, otherwise known as Obamacare or SustiNet, in our state."

“Remove the enhanced health care plan out of this agreement, and it will be ratified. It's as simple as that. I never saw so much anger generated as this enhanced health care agreement,” said Mr. Padilla, a union leader talking truth to power who likely will not be invited to high tea when Mr. Malloy and Mr. Occhiogrosso and Mr. Barnes and other architects of Plan A gather together, along with self anointed union leaders, to celebrate what may be a successful attempt to overthrow a rank and file union vote.

Of course, Mr. Occhigrosso, once a union operative himself, would not put it in such stark terms. Mr. Occhiogrosso was hired in the late 90’s as a union organizer by an AFLCIO group, AFT-Rocky Hill. The governor, Mr. Occhigrosso responded, is working within a tight time frame, and he must – really, MUST – deal with the projected $700 million deficit in the state's unbalanced budget. A budget is unbalanced when expenditures do not equal receipts. Connecticut’s tax receipts and expenditures have been out of balance ever since the budget was approved by the Democrat dominated General Assembly weeks ago. Perhaps someone should share Mr. Occhiogrosso’s anxiety with Superior Court Judge James Graham, who recently expressed doubts in oral argument that he could rule on a suit claiming the budget was unconstitutionally out of balance because the state legislature had neglected to define the term “expenditure.”

"All I would say,” Mr. Occhiogrosso said in response to Mr. Padilla, “is the governor has to proceed as if there is no agreement because, right now, there isn't. If it turns out that SEBAC, through its own internal process, can alter that, it's certainly something the governor would keep an open mind about. But today is June 27. … It's his responsibility to make sure a balanced budget is in place by Thursday."

Mr. Occhiogrosso pointed out that there was “a widow of time,” though the window is open but a sliver, for unions to resolve the situation. In non-politicalese, resolving the situation would mean negating the union vote to reject Plan A, camel objections and all.

Mr. Padilla’s beef, however, does not end with a protest that some union leaders seem a bit too anxious to throw a legitimate union vote into the sharp teeth of politicians who would benefit from the health care changes; it has been pointed out that some politicians eagerly hawking Plan A, such as Lieutenant Governor Nancy Wyman and State Comptroller Kevin Lembo were co-chairs of the SustiNet board when Ms. Wyman was State Comptroller and Mr. Lembo State Healthcare Advocate.

The union leaders who now seem prepared to suspend the union vote indefinitely insist there is no connection – none at all – between changes in union benefits that would facilitate an easy transition into a SustiNet plan and Mr. Malloy's Plan A, now gurgling beneath the waves.

Mr. Padilla’s union voted against Plan A because members were suspicious of the motives of both union negotiators and reformist Malloy administrators, but other troubling aspects affected the vote as well. Mr. Padilla’s own objections to Plan A are perhaps more comprehensive than Mr. Occhiogrosso would wish.

According to one account, Mr. Padilla said in a statement that prison guards voted against the deal because of "the continued and insatiable appetite for spending; structural, institutional, programmatic or otherwise, including the perception of the ever-growing welfare state, a new state earned income tax credit, a magic bus to nowhere, an unprecedented expansion of UConn, a bloated and redundant bureaucracy, etc., by those in the legislature and the governor's office despite this so-called 'shared sacrifice,' which is being financed on our backs.''

Polls Spank Malloy

The most recent poll from the Yankee Institute shows Governor Dannel “The Vozhd” Malloy blowing bubbles below the water line.

“Voters oppose by wide margins every Malloy administration initiative tested in the survey:
• On the budget deal, 57% of voters say the new state budget agreement ‘spends too much and raises taxes too much,’ while 39% describe it as ‘about as good as could be expected given a weak economy.’
• On the labor union concessions, 49% of voters say state employee unions ‘did not give up enough and should have been asked for more,’ while 36% say ‘the unions did give up a lot.’
• By a margin of 60-30%, voters describe the $572 million New Britain busway project as ‘a bad use of taxpayer money.’
• By a margin of 56-25%, voters describe the $864 million UConn Health Center expansion as ‘a bad use of taxpayer money.’”

During the next legislative season, Mr. Malloy plans to travel about the state attempting to convince easily duped businessmen that Plan A, which includes a doubling of the corporate surcharge tax and the largest tax increases in Connecticut’s history, are good for business.

Mr. Malloy’s assault on business in Connecticut is old news to those who follow Connecticut Commentary.

The numbers on the latest Quinnipiac poll will not lighten the hearts of Malloy accolades:

“Connecticut voters give Gov. Dannel Malloy a negative 38 - 44 percent approval rating, apparently driven by 43 percent who are "dissatisfied" with the new state budget and another 16 percent who are "angry" with the budget, according to a Quinnipiac University poll released today. Only 36 percent described themselves as ‘enthusiastic’ or ‘satisfied’ with the budget.

“Today's results compare with a negative 35 - 40 percent approval rating for Gov. Malloy in a March 9 survey by the independent Quinnipiac (KWIN-uh-pe-ack) University poll.”

According to a CTMirror report, poll director Doug Schwartz said the low numbers are a reflection of how voters perceive the Malloy budget:

"'His low approval rating is a reflection of how voters feel about his budget,' said Douglas Schwartz, the poll's director. 'Many voters are dissatisfied and some even say they are angry. They think the budget relies too much on tax increases and not enough on spending cuts. They also think the middle class is paying more than its fair share while those with higher incomes aren't paying their fair share.'

"Only 17 percent say the new budget fairly spreads taxes across income groups, while 67 percent say Malloy should have sought higher taxes from people with higher incomes, a view that eroded support in his Democratic base. His tax package is viewed as fair by more Republicans (27 percent) than Democrats (10 percent) or independents (19 percent.)

"'Gov. Dannel Malloy should be doing better in a blue state like Connecticut, but he gets only a 52 percent approval rating among his base of Democrats,' Schwartz said.”

The Republican-Democratic divide may signal the beginning of a class warfare struggle between progressive Democrats and center right elements in both parties.

Having accomplished at the tail end of the flaccid administration of Governor Jodi Rell their aim of adding a progressive feature to the relatively flat Weicker income tax, progressive Democrats in the legislature such as Speaker of the House Chris Donovan and President of the Senate Don Williams have been signaling their eagerness to make the rates tax more steeply progressive. Mr. Malloy’s resistance to the effort is rooted in prudential rather than ideological predilections. But his soft resistance, moderate Democrats and Republicans fear, may easily be overcome.

Mr. Malloy’s effort's in accommodating unions has been much more energetic than his efforts to accommodate, say, Republicans, who are now being cited by Mr. Donovan for their obduracy. Even a slight resistance on the part of Republicans to the Malloy-Williams-Donovan juggernaut is bound to be characterized by Connecticut's new one party state as "extreme", a useful derogation borrowed from Sen. Charles Schumer of New York.

Of course, the Republican objections to a budget that even the left of center New York Times has characterized as “the most liberal in living memory” are hardly extreme. Since Democrats clearly have decided to use their numbers in the General Assembly to establish a progressive regime, the objections, however apposite, will most certainly fall on deaf ears. It is a considerable understatement to say of those who are willfully deaf that they do not care about objections and polls they choose to discount.