Malloy, a Utopian Twinkie?

To a certain degree, all utopianists are eternal optimists –Panglossian optimists. The world may be crumbling about them, but their lively imaginations lift them above the debris.

Realists will agree that the future does not seem sparkling for Europe just now. The latest news is that ALL of Europe, with the possible exception of stout Germany, has entered a second, double dip recession.

In Greece, Spain and perhaps Italy a depression has sunk its teeth into Europe’s soft underbelly. Greece, the home of democracy, bid democracy goodbye as it tumbled into a depression, overloaded with accumulative debt and unsustainable social programs. Euro-technocrats now direct its future. In Italy, Spain and perhaps France, the same stern number crunchers are waiting in the wings for the inevitable collapse of European Social Democracy.

Here in the United States, voters from sea to shining sea have just reelected as president the most progressive, European oriented chief executive in the country’s history. Mr. Obama has been steering the political ship of state in the direction of the European model for the past four years, at a time when Europe -- weighted down with, to mention only two straws breaking democracy’s back, an expensive universal health care system and unsustainable pensions -- appears ready to pitch over the cliff.

Not to worry. Forward!

Panglossian Connecticut marches forward with a ragged future at its elbow. Another day has been tucked into bed, and the state has received yet another “F” from yet another rating service; this one, Conning Inc., a Hartford-based asset manager that does financial research for insurers and institutional investors. Among all 50 states, the Conning report advises, Connecticut is dead last in credit quality.

The managing director of the company, Paul Mansour, writes that while Connecticut does not make most listings of states in fiscal stress,“… the reality is quite alarming. The state is among the worst in job creation, tax revenue growth, and has not yet seen a recovery in home prices. It has very high debt and retirement obligations, little budget flexibility and no rainy day fund balance.”

Job creation has been stagnant in Connecticut even since former Governor Lowell Weicker instituted his income tax to discharge a $2 billion deficit. In the blink of an eye, Connecticut’s government went on a spending spree, which ought to have convinced members of the General Assembly that the spending thigh bone is connected to the revenue shin bone in such a way that when revenues increase spending also increases. Connecticut’s current budget is about three times as large as the last pre-income tax budget presented to the legislature by former Governor Bill O’Neill. Larger state revenues, we now know from painful experience, do not translate into deficitless budgets. The current deficit – the size of which depends upon which political shyster one asks – has also kept pace with increasing revenues. After the Weicker income tax and the Malloy tax increase, the largest in state history, the state budget has reverted to the status quo ante in the pre-income tax days of O’Neill. This is the opposite of progress.
 

Once a magnet for business growth owing to its low taxes, budget hawking business-friendly General Assembly and modest regulatory environment, Connecticut has become an entrepreneurial pariah. The governor now bribes companies to remain in the state by offering to a preferred few a raft of crony capitalist inducements-- tax credits, low interest loans and free buildings -- on condition that the captive companies produce a set number of jobs within a predetermined time frame. 

Eyes outside the state are watching and taking note of Connecticut’s regression. Graduates from Connecticut’s very expensive institutions of higher learning are carrying their diplomas to more prosperous states. On holidays, our sons, nephews, nieces, brothers and sisters arrive “home” from the Carolinas, Texas or Florida. Made in Connecticut companies are fleeing high business costs for more profitable states, and even our plunderable millionaires are beginning to look over their shoulders at better prospects elsewhere. Since 1991, the state has not been negotiating with prospective businesses from a position of strength.

The utopianist, imprisoned in his own walnut shell and counting himself the king of infinite space, usually identifies “the state”with state government. They are entirely different entities. Having identified the state with the ruling satrapy he is pleased to serve, he takes the matter a step further and identifies the state with himself in the manner of the Sun King, Louis XlV, who famously said, “L’etate, c’est moi” (I AM the state).

Thus the governor’s acerbic mouthpiece and Malloyalist-in-chief Roy Occhiogrosso persists in arguing that “the state” is better off than it was before Malloy extracted from hard pressed Connecticut taxpayers the largest tax increase in state history.

Really? If a thief were to extract the gold from Mr. Occhiogrosso’s teeth, the thief might well argue that HE was better off after the tooth pulling. But it takes a special sort of preening arrogance for the thief to argue plausibly that Mr. Occhiogrosso had benefited from the extraction; and only a utopian robber far gone in conceit would argue that he is his robbery victim. Occhiogrosso to Malloy:“L’etate, c’est vous.”

Lawyers call improbable defenses of the kind urged by Occhiogrosso – “You’re better off” -- twinkie defenses. Speaking of Twinkies, the latest Connecticut company to throw in the white flag – after a dead-end negotiation with a greedy union – is Hostess of Wonder Bread and Twinkie fame. After the union induced shutdown, twinkies will be available only in the Malloy administration; when budget time rolls around, one may hope Mr. Malloy will have better luck with SEBAC than Hostess did with its unions.

Abandon All Hope Ye Who Enter Here

All budgets are plans for the future. The budget worked out between Gov. Jodi Rell and the leaders of the dominant Democratic Party in Connecticut’s state legislature, principally Speaker of the House Chris Donovan and President Pro Tem of the Senate Don Williams, will go to press a little more than two weeks before the Democratic and Republican nominating conventions to be held in Hartford on May 21-22.

There are no surprises in the budget, which patterns, with almost ridged precision, the template of past budgets in which gapping holes were filled with chewing gum and hopeful views of the future.

Democrats, heedless of the warning signs everywhere apparent, are convinced that a rising tide will in the near future lift all the boats, Connecticut’s little bark among them. Collectively, the Democratic legislative caucus is Pangloss, drawing hope from the future rather than the past.

Pangloss was a character developed by Voltaire in Candide who, despite the horrors inflicted upon him by cruel fate, continued to believe that the world in which he lived was “the best of all possible worlds.” Earthquakes, revolutions, mass executions were unable to detach Pangloss, Candide’s philosophical tutor, from his inviolable optimism. The loss of his beloved to bandits who raped and mutilated her finally convinced a weary Candide that his philosophical tutor was a bit too optimistic for Candide’s own good.

Operating on the Panglossian notion that tomorrow will be the best of all possible worlds, state Democrats and Rell have now put forth a budget that optimistically looks past what some more worldly Republicans and a handful on unblinkered Democratic legislators regard as the coming train wreck.

Almost half of Connecticut’s budget crater is to be filled by contributions from an administration in Washington that has, in the two years it has been in office, tripled the national debt. The real cost of the new programs initiated by the president and the dominant Democratic congress have not yet registered on the national economic seismograph. Public debt as a percentage of Gross Domestic Product has increased fourfold during the current administration.

Tin cup in hand, Connecticut has now become a beggar state. It is not alone.

And it is only a matter of time before cash poor Washington begins to treat beggar states in the same way large beggar corporations have been treated., Uncle Sam, himself indebted to foreign states from which he is borrowing heavily to meet his own obligations, surely would not be willing to give alms to wealthy states like Connecticut in the absence of budgetary proof that the state has instituted cost saving measures. New Jersey’s legislature, prodded by a cost conscious governor, has offered some proof that it is serious about controlling future spending.

Connecticut has not

There are no serious costs saving measures in Connecticut’s new budget. It is a budget that will satisfy pressure groups that control powerful legislative leaders in the House and Senate. It is a budget that answers the unstated question roiling in the minds of wealth producing entrepreneurs who, following others gone before them, will vote with their feet by either leaving the state or refusing to come here.

Even New Jersey will offer greener pastures to wealth generators than Connecticut.

In addition to providing a view to the future, Connecticut’s most recent budget is a reliable measure of the cowardice of politicians.