Connecticut’s Media-Progressive Complex: Or -- It’s The Spending, Not The Taxes, Stupid

CTMirror asks in a recent story “Is it time to overhaul Connecticut’s tax system?”

The progressive wing of the Democratic Party, now in the ascendency in Connecticut, has been trying to “reform” the tax system ever since it was last reformed in 1991 by then Governor Lowell Weicker, the father of Connecticut’s income tax.

In the course of its story, CTMirror quotes William Cibes, identified as “state budget director under Weicker and also co-chairman of the finance committee in 1989-90,” on property taxes. Mr. Cibes recently testified before the General Assembly’s Finance, Revenue and Bonding Committee, which in the next few weeks will endorse a measure “that could launch a top-to-bottom analysis of how Connecticut taps taxpayers’ wallets.” Mr. Cibes testified that “high property taxes are a major reason why Connecticut’s tax system is broken. So property tax relief would lessen the economic burden on businesses, municipalities and individuals… Property taxes are relatively stable. But when a state relies excessively on property taxes to fund important services like education, infrastructure and public safety, businesses and individuals are punished.

Mr. Cibes’ statement was remarkably similar to an earlier Op-Ed piece printed in CTMirror written by John A. Elsesser, the town manager of Coventry: “The good thing about property taxes is that they are relatively stable. As part of an overall revenue structure, which is relatively balanced among taxes on property, sales and income, they make sense. But when a state relies excessively on local property taxes to fund governmental services, as does Connecticut, it’s reasonable to begin working to fix what House Speaker Brendan Sharkey has termed a ‘broken’ tax system.”

Mr. Cibes and Mr. Weicker were both prime movers in the effort to adopt an income tax. While campaigning for governor, former Republican U.S. Senator Weicker, running within a party of his own making, had eschewed an income tax as a means of liquidating a Democratic generated billion dollar deficit. Adopting an income tax, gubernatorial campaigner Weicker said, would be “like pouring gasoline on a fire.” Mr. Cibes had run for governor on an income tax platform, but he and his platform were decisively rejected at the time by 65% of Democrats.

While Connecticut’s income tax was muscled through the General Assembly by Governor Weicker, the income tax idea and its implementation originated with Mr. Cibes, whom Mr. Weicker tapped to head the state’s Office of Policy Management. Declining to run for a second term as governor, a grateful Weicker, before leaving office, created a plush featherbed for Mr. Cibes, appointing him the first Chancellor of Connecticut’s new Connecticut State University System. Like old soldiers, old political operatives never die, but neither do they fade away. They become associated with lobbying firms or pad their retirements with pensions drawn from tax dollars.

It should surprise no one, least of all the editors of CTMirror, that Mr. Cibes continues to insist that Connecticut is undertaxed. Mr. Cibes certainly is within easy reach of the reporters and editors of CTMirror. Mr. Weicker’s former OPM chief was one of the co-founders of CTMirror and serves on its board of directors, as does Stanley Twardy, former Chief of Staff for Mr. Weicker. According to a report in Raising Hale, CTMirror is published by Connecticut News Project. A review of political contributions by board members of CTMirror shows that eight of the ten board members have made donations to political candidates totaling more than $125,000, seventy five percent of which enriched Democrats.

The Weicker-Cibes income tax of 1991 dropped the sales tax rate from 8% to 6% and the corporate tax rate from 13.8% to 11.5%. A Rainy Day tax fund, since depleted by spendthrifts in the General Assembly, was also introduced, along with a largely irrelevant constitutional expenditure cap. Through inadvertence or design, the Democrat dominated General Assembly never quite got around to implementing the constitutional cap and, following the passage of the Weicker-Cibes income tax, spending in the state tripled within the space of three governors, two of whom were Republicans.

Mr. Cibes’ pitch on the necessity of tax increases sounds wearily familiar, especially coming on the heels of Governor Dannel Malloy’s massive tax increase, the largest in state history, which out-revenued even the Weicker-Cibes income tax.

Commending a plan put forward by “Better Choices For Connecticut”, progressive tax grabbers, Mr. Cibes argued a few years ago in his pitch for higher taxes that Connecticut could not possibly offset its deficit through spending reductions alone, and he called for a “fair share’ sacrifice on the part of taxpayers and tax gobblers, a motif candidate for governor Dannel Malloy deployed effectively in his campaign.

The revenue proposals promoted by “Better Choices For Connecticut” and embraced by Mr. Cibes included an increase in the income tax for “those who can best afford it,” likely anyone making more than $250,000 per year, an increase in corporate taxes and an increase in the sales tax. The corrective measures promoted by Mr. Cibes insert progressive features into the Weicker-Cibes income tax, considered by some when it was passed as insufficiently progressive. At the time of passage, Mr. Cibes had told the New York Times that the architecture of the tax made it more progressive than it seemed. But progressives believe you can never have enough of a good thing.

Once the new revenue proposals are imposed on the Weicker-Cibes income tax, Connecticut will have adopted the same tax scheme Mr. Cibes promoted when he ran for governor way back in 1991. Property tax relief is little more than a convenient cover that will allow progressive Democrats to boost taxes when, after the upcoming elections, the state once again finds itself confronting a $2 billion deficit brought on by exorbitant spending. And the reporters and editors at CTMirror are too bright not to have noticed the obvious sham. One can only conclude that in failing to report sufficiently on one of its board of directors, CTMirror did not wish to place before its readers such inconvenient truths as might disturb Mr. Cibes and others who financially support the Connecticut News Project.

The State Of Malloy

There is no question that Governor Malloy shakes things up. But when the fizz settles, you find yourself holding the same old bottle of beer – only now it’s flat.

“The budget is everything to Malloy,” former Democratic gubernatorial candidate Bill Curry told a New York Times reporter, after which Mr. Curry issued a timely warning: “The last thing you want is a sequel to a fiscal crisis.”

National Democrats could not produce a budget, even though they controlled both houses of the U.S. Congress and the White House. The day that President Barack Obama delivered his “State of the Union” address marked the thousandth day the nation had hobbled along without a budget.

The budget situation in Connecticut is not quite that bad. Both houses of the General Assembly have been controlled by Democrats for decades. During the last election, state Democrats captured the governor’s office for the first time in more than twenty years. Taking a page from former “Maverick” Governor Lowell Weicker, the father of Connecticut’s income tax, Governor Malloy inaugurated the largest tax increase in state history, a record previously held by Mr. Weicker. The Malloyalists have said the budget is balanced, but voices in other rooms say “No.”

The expected “savings” in Mr. Malloy’s budget could not be verified by the state’ non-partisan Office of Fiscal Analysis on the day it was submitted for approval to the General Assembly. News outlets recently have reported that Connecticut is running a deficit following the largest tax increase in its history, but the prospective red ink has not tamed the inclination of Democrats to recklessly spend other people’s money. Even drunken sailors stop spending when they pass out on the curb; not so with the Democratic controlled General Assembly. Mr. Malloy’s budget prospectus includes more unaffordable Big Think spending.

Persistent critics of Mr. Malloy point out that he tied at least one of his busy hands behind his back in concluding a deal with unions in which current state workers agreed to a wage freeze for two years followed by three percent increases for nine years and a no-layoff pledge for four years, a sweetheart union deal that, given a faltering economy, easily could prompt Mr. Curry’s feared “sequel to Connecticut’s budget crisis.” Should Mr. Malloy feel the itch to cut spending on state employees’ salaries or woefully underfunded pension benefits, he will not be able to scratch it for nine years out. Indeed, Mr. Malloy’s revised Plan A budget deal is one of the reasons why Edith Prague – other than Speaker of the House and announced Democratic candidate for the U.S. Senate Chris Donovan, perhaps the most ardent union supporter in the known universe – said during the unions-Malloy Kabuki contract negotiations that SEBAC union negotiators would be insane to reject Mr. Malloy’s more than generous offer.

Mr. Malloy’s first budget, pre-approved by the General Assembly before negotiations with unions had been completed, was deconstructed and reconstructed after contentious negotiations between the governor and SEBAC, a coalition of unions authorized to negotiate contracts with the administrations’ budget handlers. In his “State of the State” address, Mr. Malloy mentioned his first budget as an instrument that had “bridged a $3.5 billion deficit, implemented Generally Accepted Accounting Principles, and reached an agreement with our state’s public employees that will save taxpayers twenty one and a half billion dollars over the next 20 years.” Every proposition in that statement has been hotly disputed, but there was no mention of disputed budget figures in Mr. Malloy’s presentation the real subject of which was “me,” “myself” and “I”.

A current Office of Fiscal Analysis’ Overview of Governor Malloy’s Fiscal Year 2013 budget shows an increase in spending, an increase in taxes, a disappearing surplus, consolidations that produce no savings, a savings decrease and some confusing motion in the bottom line of the budget – none of which is uplifting. Here’s hoping the relevant legislative committees read the report.

Just for the record, Mr. Malloy mentioned the word “I” eighty nine times in his “State of the State” address. His more modest predecessor, former Governor Jodi Rell, mentioned the word “I” in her 2006 “State of the State” address 46 times. Former Governor John Rowland used the “I” word 14 times during his 2004 State of the State address. Former Governor Lowell Weicker, the father of Connecticut’s income tax, made use of the word 18 times in his 1993 State of the State address. No stranger to the word “I” -- Mr. Weicker auto-biography “Maverick” was reviewed by columnist and Managing Editor of the Journal Inquirer Chris Powell under the title “Mr. Bluster Saves The World" -- has been known to overuse the first person singular in his philippics. It is no mean solipsistic accomplishment that Mr. Malloy has outstripped his most energetic predecessor by a perhaps unsurpassable margin.

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.

Fannie, Freddie, Dodd, Blumenthal And Government Supported Entities

Even the New York Times, a publication that can hardly be accused of harboring black thoughts about the usual culprits in the U.S. Congress, referred last August in a news story to Fannie Mae and Freddie Mac, two quasi-private business enterprises cosseted by the Democratic Congress, as “wards of the state.” Previously, each had been designated a Government Supported Entity (GSE).

In a news story – the editorial board of the Times, predictably listing left, has already predictably endorsed Connecticut’s attorney General Richard Blumenthal for Congress – reporter Gretchen Morgenson snickered that Fannie and Freddie, now become wards of the state sucking the blood from taxpayers, “got just two mentions in the 1,500-page law known as Dodd-Frank: first, when it ordered the Treasury to produce a study on ending the taxpayer-owned status of the companies and, second, in a ‘sense of the Congress’ passage stating that efforts to improve the nation’s mortgage credit system ‘would be incomplete without enactment of meaningful structural reforms’ of Fannie and Freddie.”

“Fannie and Freddie amplified the housing boom by buying mortgages from lenders, allowing them to originate even more loans. They grew into behemoths because they lobbied aggressively and played the Washington political game to a T. But after both companies bought boatloads of risky mortgages, they required a federal rescue…

“Outwardly, Fannie and Freddie wrapped themselves in the American flag and the dream of homeownership. But internally, they were relentless in their pursuit of profits from partners in the mortgage boom. One of their biggest and most steadfast collaborators was Countrywide, the subprime lending machine run by Angelo R. Mozilo.”

OhMyGod!!! as the kids sometimes say. There it is – “Countrywide,” somewhat in the news these days largely owing to an ad recently released by the Linda McMahon campaign that mentions Blumenthal, according to recent polls the heir apparent to Dodd’s seat.

The McMahon ad was put under the microscope a few days ago by Hartford Courant scrutinizers and found wanting. The ad touches an important point, gently but inadequately. The Courant misses the critical point entirely -- this point: All the so called GSEs have failed miserably. But they failed upwards – because they were Government Backed Entities. Fannie, Freddie and Countrywide were too well connected with Washington insiders to fail. In the private marketplace, failure means bankruptcy, scowling judges, ransacked investors and, at the margin, possible jail terms for CEO frauds. In a command business structure in which Washington decides what business are to succeed or fail, GSEs, underwritten by taxpayers, are resuscitated when they fail -- by taxpayers. That is what a bailout is: It involves a taxpayer infusion of funds to politically connected businesses that are too big to fail engineered by a paternalistic government committed to a command economy that has become too big to fail.

This should be the issue in all Connecticut’s congressional campaigns: How long can any administration in Washington continue to shuttle the wealth of the nation to failed enterprises before the wealth is depleted?

Angelo Mozilo, the CEO of Countrywide, it should be noted, is not in jail. A settlement was made in his case, with the energetic assistance of more than a dozen state attorneys general, Blumenthal prominent among them. The settlement having been made, Blumenthal, who should have been monitoring his settlement, was distressed, we discover from recent news reports – really distressed, and surprised too, very surprised, indeed shocked – that Mozilo’s patrons in Washington took care of Countrywide and other of its GSE co-conspirators such as the Bank of America, which purchased Countrywide’s fraudulent mortgages, by passing along the bill to taxpayers.

It turns out, after all the sleight of hand, that taxpayers who contribute to pension funds will be picking up the tab. Billing pensioners is nothing new in Connecticut where, under a Democratic regime that claims to represent the interests of teachers and firefighter and other public servants, pension funds are regularly raided by legislators and governors, while political benefactors such as John Larson and Blumenthal look the other way.

We should draw two indispensable lessons from the Countrywide-Fannie-Freddie-Bank of America affair: 1) Monopolies such as Countrywide, Fannie and Freddie cannot be formed without the willing participation of governing officials such as Dodd and Barney Frank who afford them privileges not enjoyed by their competitors in a diverse free market, and 2) Any business savvy enough to become a cosseted GSE has acquired enough friends in Congress and the Obama administration to pass along to others any comeuppance served up with great fanfare by Blumenthal and his cohorts.

Blumenthal’s response to Bank of America’s great escape from sanctions thought by Blumenthal to have been imposed on them by the attorneys general is further evidence that the people of Connecticut should vote someone other than him to send to Congress.

Blumenthal On The Uptick

Attorney General Richard Blumenthal’s recent dip in the polls, owing to his multiple lies concerning his service in Vietnam, is now bending in a more favorable direction for him.

Analysts are busily interpreting the uptick in a recent Rasmussen poll.

National commentators still insist that Blumenthal lied rather than misspoke when he said, addressing some veterans groups in which media presence was light, that he had served in Vietnam.

After the single questionable reference in a New York Times front page story had spurred other papers to search their archives, other Blumenthal misspeakings soon surfaced. The multiple instances in which Blumenthal asserted he had served in Vietnam threw into doubt the attorney general’s assertion that he misspoke.

In a June 3rd story in the National Journal.com for instance, Jamie Shufflebarger wrote:

“Blumenthal said or implied on numerous occasions that he had served in Vietnam during the war. He most famously said in '08 that "We have learned something important since the days that I served in Vietnam." There are at least 5 other direct quotes from Blumenthal stating that he "wore the uniform in Vietnam" or "returned from Vietnam." His campaign material and official bio all clearly state that he was in the reserves during the war and never served abroad.”

While heavily criticized in the national media, Blumenthal appears to have gotten a pass from the state’s media. Following a week of heavy criticism, the attorney general, having consulted with some Beltway fix-its provided by President Barack Obama’s administration, said via e-mail:

“At times when I have sought to honor veterans, I have not been as clear or precise as I should have been about my service in the Marine Corps Reserves. I have firmly and clearly expressed regret and taken responsibility for my words.”

In an editorial, the Hartford Courant said Blumenthal’s “apology” had sufficiently “cleared the air,” and when former Courant Watchdog George Gombossy, a veteran, questioned the attorney general’s apology, he was denounced by a Courant commentator. Gombossy is suing the paper for having improperly discharge him, but he has been unable to question the attorney general, who has been adroitly avoiding him.

Blumenthal’s continuing reluctance to admit he lied about his service has earned him a place on the national psychological couch.

The New York Times followed up its initial story, citing other instances in which Blumenthal lied about his service record. The Times' editors also opened its pages to commentators Mark Maslan, an English professor, Jonathan Turley, a professor of public interest law, Bella DePaulo, a psychology professor, and
Henry Mark Holzer, a co-author, “Fake Warriors: Identifying, Exposing, and Punishing Those Who Falsify Their Military Service.”

“It’s not uncommon for people — even public officials — to lie about their military service, The Times pointed out and asked, ”What’s behind this kind of deception?”

Mark Maslen, now writing a book titled “False Witness: Counterfactual Testimony and Postmodern Truth,” quoting Blumenthal telling one audience “I remember the taunts, the insults, sometimes even physical abuse” he presumably suffered as a result of his service in Vietnam, suspects that Blumenthal’s “fabrications concern humiliation more than heroism.”

Blumenthal’s lies, Maslen commented, “cannot be explained by a hunger for glory, but by a need to be part of a traumatic past that we all share. In this, he resembles the fake Vietnam vets, whose stories more often concern harm suffered and witnessed than bravery proven.”

Turley, a columnist who writes on legal and policy issues and blogs at jonathanturley.org, is convinced Blumenthal is no Walter Mitty. Blumenthal already had been leading in reality the Walter Mitty life that the character in James Thurber’s short story could only dream of. The Shapiro Professor of Public Interest Law at George Washington University thinks the temptation to claim unearned military distinctions is sometimes irresistible among politicians:

“Politicians thrive on symbols and rhetoric that create bonds with the public. Military service is perhaps the strongest such self-authenticating qualification. It recasts a politician in a new light — not some self-serving egomaniac but a selfless public servant. Blumenthal’s comments about the trauma of returning home to a hostile nation would resonate with anyone and elicit universal affection.”

However, there are dangers in the pursuit of universal affection:

"For the state’s top prosecutor (and a senatorial candidate), such claims are particularly problematic. Blumenthal’s office routinely prosecutes fraud and false statements in various contexts. Moreover, federal law makes certain false military claims a criminal matter. (Under the Stolen Valor Act of 2005, a person claiming specific military decorations or medals could be sentenced to a year in jail)… Of course, the terrible irony is that reinventing oneself in this way can wipe away years of well-deserved respect and trust. In the eyes of many, Blumenthal has joined the ranks of the ‘semper frauds.’ While he told crowds that he still remembered “the taunts, the insults, sometimes even physical abuse” following Vietnam, he is now experiencing that very reaction from citizens.”

Visiting professor of psychology at the University of California Bella DePaulo, who has written extensively on the psychology of deceit, remarks that those who “are fond of the liar, or feel indebted or invested in the liar, will rush forward to defend their friend. Their public show of support only makes it harder for the liar to come clean, since a confession would hurt and humiliate the very people who stood up for the liar.”

Professor emeritus at Brooklyn Law School Henry Mark Holzer, co-author of “Fake Warriors: Identifying, Exposing, and Punishing Those Who Falsify Their Military Service,” uses the term “fake warrior, to describe a person, overwhelmingly male, who lies about having had military service or, having served, embellishes his record.”

Public officials especially “want to be seen (whether they are or not) as tough, disciplined and patriotic. Those characteristics inhere in no calling more than the military, which is why public official fake warriors don’t claim to have invented a cure for gout or once caught the largest shark. Instead, they almost always fictionalize their military service.”

Part of the corruption of absolute power may be traced to the insularity of powerful people. Told often enough that a man is a saint, the saint soon gives himself permission to sin. And when the watchdogs sleep, the only restraints available to the sinner are those he lays upon himself.