Is Anyone Home?

The Connecticut Business and Industry Association (CBIA), it must be admitted, knows a thing or two about Connecticut’s businesses and industries – perhaps even more than members of the state’s General Assembly, a majority of whom regularly pass bills and restrictions on companies in Connecticut, sometimes heedless of the real-world unintended consequences of such legislation.

CBIA, one of the largest statewide business organizations in the country, boasts 10,000 member companies. In business for more than 175 years, CBIA represents the collective voice of Connecticut’s industries crying in a parched wilderness.

A few weeks ago, John Rathgeber, CBIA’s CEO, was invited by The Connecticut Policy Institute to speak to a group at the United Health Care headquarters in Trumbull about the state of the state – not good – and suggested course corrections. Mr. Rathgeber is unfailingly polite, soft spoken and a superb business analyst. Asked whether he is making any headway against Connecticut’s hostile business climate, he smiles wanly and hints some progress is being made: “It is still not too late for Connecticut to change directions.”

Hope springs eternal, even from the ashes, but a general survey of the state of the state of Connecticut by Forbes magazine that pulled together in one spot most of the depressing data boiling for  two decades on the state’s back burners -- “How Did Rich Connecticut Morph Into OneOf America's Worst Performing Economies?” -- presented a uniformly dreary picture of Connecticut’s trajectory from its post income tax period forward towards a doubtful future.

Among other blots on Connecticut’s future, Forbes noted that:

“Connecticut has run up the fourth largest pile of debts per capita — $27,540. This includes unfunded liabilities for government employee pension funds.  The total is almost double the per capita debts of financially-strapped California.  Higher debts imply higher taxes in the future…

“Barron’s considered Connecticut to be in the worst financial shape – with debt and pension liabilities a higher percentage of GDP (17.1) than any other state…
“Connecticut has one of the worst business climates in the country.  Factors affecting a state’s business climate include the individual income tax, corporate income tax, sales tax, property tax, unemployment insurance tax and security of private property.  For example, as the Tax Foundation reported, “Connecticut imposed a temporary 20 percent surtax on top of its flat 7.5 percent corporate income tax, in effect raising its rate to 9 percent. This 20 percent surcharge is an increase on a supposedly temporary 10 percent surcharge that has been in place since 2009.

“The American Legislative Council, in its annual Rich States, Poor States study, ranks states two ways – economic performance and economic outlook.  The economic performance ranking is based on a state’s GDP trend, migration trend (in or out) and non-farm payroll enrollment trend.   The economic outlook ranking is based on 15 factors, including the top marginal personal income tax rate, the top marginal corporate income tax rate, property tax burden, estate tax burden, public employees per 100,000 population, state liability system survey and whether a state has a right-to-work law.  Connecticut is ranked #46 for economic performance and #43 for economic outlook.”

Space permits only a partial listing of the state’s deficiencies mentioned in the Forbes report.

Mr. Rathgeber also touched some of the same sore points in his remarks; indeed, much of the statistical data reported by Forbes appeared in one form or another in earlier reports issued by CBIA and other commentators.

Mr. Rathgeber’s CPI address may be found in full here.

Following the Forbes report, editorial optimists at a Hartford paper noted that while the data presented a uniformly bleak picture, there were some bright splotches of sunlight piercing the darkness: 

“There's more to any state's economy than its business climate. In June, the Social Science Research Council ranked Connecticut best in the nation in terms of overall well-being, including income, health and education. The Economist magazine's Human Development Index ranks Connecticut the best of all states. The NBC subsidiary iVillage year ranked our state the top for women.”

Asked what it would take to convince progressive Democrats in the General Assembly and Connecticut’s left of center media that a major course correction is necessary to pull the state from its death spiral, Mr. Rathgeber’s answer was so soft and gentle that it may do no more than tickle the ears of legislators who long have been committed to the proposition that repeated increases in revenue – rather than significant cuts in spending – is the all-purpose solution to Connecticut’s downward plunge.

“It may take a burning bridge.”

Maybe, just maybe, the airplane has to crash into the mountain – Detroit-like – before other sleepy commuters shake off their lethargy, read correctly the signs of the times, and plot a future course-correction that squarely addresses real ameliorative action leading to lower spending, an end to crony-phony capitalism, lower cost and higher quality elementary school education – to avoid remedial reading and math classes in college – general reductions in state mandates and regulations that compel businesses to jack up prices that make Connecticut entrepreneurs uncompetitive in a global marketplace and – the kicker -- the privatization of appropriate state functions to lower fixed costs paid through ever increasing taxes that de-simulate Connecticut’s once thriving economy.

Jobs and Connecticut’s recovery will not come from a reinvention of Connecticut’s economic wheel, a fantasy of ambitious self-promoting politicians. It is far easier to produce jobs from the state’s present businesses, Mr. Rathgeber said. And this can be done through permanent tax reductions and a steady, determined deregulatory process that will snap the chords with which Connecticut has bound its business Gulliver for the past three decades.   

Who within the General Assembly will burn the bridge and commit Connecticut to a more prosperous – albeit, a less political advantageous -- course of action?

It would take only a few men and women of courage to restore the state’s past and reset the state’s future.

Obama Administration Hit With A Triple Whammy

While President Barack Obama was doubling down on his discredited narrative concerning the attack by terrorists on the Benghazi consulate, in the course of which Mr. Obama’s personal minister – that is what an ambassador is; the personal minister of the president – was murdered, it was revealed that the Internal Revenue Service (IRS) had targeted Tea Party groups for what may turn out to be punitive audits.

National Public Radio briefly reported that when the president was asked a question concerning “reports that the IRS targeted organizations that identified themselves as ‘tea party’ or ‘patriot groups and gave their applications for tax-exempt status extra reviews, Obama said:

"’This is pretty straightforward. ... If in fact IRS personnel engaged in the kind of practices that have been reported ... and were intentionally targeting conservative groups, then that's outrageous and there's no place for it.’ Those responsible, he said, will ‘be held fully accountable.’”

Mr. Obama was asked about the audits during a press conference that featured British Prime Minister David Cameron. The president’s initial response, the promise of a severe dressing down of the IRS, passed muster with the increasing band of journalists who thought Mr. Obama’s handing of the Benghazi assault was seriously deficient. Even Fox News, unrelenting on Benghazi, slathered the president with commendations. Brit Hume of Fox News generously allowed the president’s initial response was the right one.

An explanation offered by IRS tax-exempt chief Lois Lerner quickly came under fire. Ms. Lerner attributed the possible “outrageous” conduct to “line people” in Cincinnati, Ohio who had “used names like Tea Party or Patriots” as criteria for selecting tax-exempt applications for further scrutiny.

Chairman of Americans for Limited Government Howard Rich noted in a piece written for Forbes Magazine that Ms. Lerner pointedly did not mention that “the IRS’ Cincinnati office is the central location for all tax-exempt application evaluations – meaning the discrimination that took place there “wasn’t an isolated, dumb incident by some random field office,” as The Washington Post concisely noted. In other words this was no error: It was official policy – which directly contradicts testimony previously provided by the agency’s leadership to Congressional investigators.”

A Reuters report noted, “When tax agents started singling out non-profit groups for extra scrutiny in 2010, they looked at first only for key words such as 'Tea Party,' but later they focused on criticisms by groups of ‘how the country is being run’ …  At one point, the agents chose to screen applications from groups focused on making ‘America a better place to live.”  Other IRS search terms included: “Government spending”, “Government debt, or taxes.” On Jan, 25, 2012, the criteria for flagging suspect groups was changed to "political action type organizations involved in limiting/expanding Government, educating on the Constitution and Bill of Rights, social economic reform/movement,’ according to an advance copy of a report done by Treasury Inspector General for Tax Administration (TIGTA), which notes that agency leadership was made aware of the discrimination nearly two years ago, who said nothing – and clearly had no plans to alert the public to what had happened.

On ABC This Week, columnist George Will remarked that the country had just celebrated – if that is the proper word – the 40^th anniversary of the Watergate summer and read from then President Richard Nixon impeachment records: “He has, acting personally and through his subordinates and agents, endeavored to obtain from the Internal Revenue Service, in violation of the constitutional rights of citizens, confidential information contained in income tax returns for purposes not authorized by law, and to cause, in violation of the constitutional rights of citizens, income tax audits or other income tax investigations to be initiated or conducted in a discriminatory manner.”

Finally, shortly after the possible “outrageous” conduct of the IRS towards the much maligned Tea Party groups knocked the Obama administration on its noggin, a third shoe fell. The Justice Department, led by Fast and Furious Eric Holder, had wiretapped the phone lines of more than a hundred Associated Press reporters in an attempt to uncover the source of a leak of top secret information. Mr. Holder, who had recused himself from investigating the event, explained in a press conference that the taps were justified because of the nature of the leak.

This is not theway to gain friends and influence reporters among the national media. To judge from subsequent media availabilities in which presidential spokesman Jay Carney was relentlessly grilled, some worm had turned in the breast of reporters, and the Obama administration, which tends to treat words as incantations that magically alter objective reality, was playing hardball defense.