Governor Dannel Malloy banged the knuckles of some state unions when SEBAC, a coalition of union leaders, failed to pass what he called “Plan A,” a budget that some legislators friendly to unions thought was inordinately friendly to unions. Sen. Edith Prague, long a supporter of union interests, said at the time she thought union members who had voted down Plan A were mad to have spurned a plan so favorable to their interests.
The governor had concocted at the same time a default Plan B that simply was not a serious contractual proposal; Plan B was designed to bludgeon recalcitrant union members into voting for Plan A. Union leaders, at the behest of the governor, then unilaterally redrafted union rules so as to facilitate a favorable vote on a slightly readjusted Plan A. The intimidation, along with the compliance of union leaders, worked, and Plan A2 finally was adopted by unions months after the General Assembly, dominated by Democrats, had voted to pass Plan A.
There was some grumbling at the time among a few legislators conversant with the separation of power doctrine: They wondered whether, having voted to accept a budget that would in the near future be subject to alterations imposed on it by unions and the governor, they had in essence surrendered their constitutional obligations to an undemocratic plenipotentiary process. But their scruples were not inhibiting, and in due course a budget, thought by some to be out of balance even now, finally was set in concrete. Apparently, constitutional scruples in the constitution state are more easily disposed of now that the state has become a one party operation.
In mid-September, addressing the AFL-CIO annual convention at Foxwoods Casino Mr. Malloy sought to quell fears that the governor’s lifelong affection for unions hadf suffered a rupture. Previously, Mr. Malloy had been making cooing sounds in the direction of Connecticut’s larger business and awarding carefully selected firms millions of dollars as a part of his First Five Plan.
At the event, Mr. Malloy was praised by executive director of AFSCME Council 4 Sal Luciano for being one of the few governors in the nation that had decided to raise taxes to balance his budget. Mr. Luciano thought much of the anger over the concession agreement between unions and the governor could be traced to poor communications and pronounced himself pleased that the pro-union governor had not declared war on labor: “It’s the first time in a long time we’ve had a governor that hasn’t actively declared war on the labor movement.”
The governor was bathed in warm applause when, contrasting himself with other more brutal governors, he said the final agreement between unions and the executive office was a necessary linchpin “to making sure we did not have to take apart our higher educational system. That was a lynchpin to making sure we didn’t have to cut aid to every municipality in the state.”
Mr. Malloy “delivered” to unions recently by issuing an executive order that will pave the way for the unionization of day care workers and personal care attendants. The order, some queasy legislators say, violates an explicit separation of legislative and executive powers and may be Mr. Malloy’s way of further soothing union restiveness.
Following his soothing address before AFSCME, Mr. Malloy hopped down to Greenwich to assure hedge fund managers he was not, as they might have supposed wrongly from his address to AFSCME, antagonistic towards the captains of industry and Wall Street. The hedgies fear excessive regulation, and the governor showed up to soften their angst.
“There is too much regulation and decisions are made far too slowly,” the governor told the group in his keynote address at the Connecticut Hedge Fund Association’s Global Alpha Forum. “Let me very clear I’m not interested in more regulation. I’m trying to streamline regulation. We know the old adage that time is money… we need to move more rapidly and responsively.”
One newspaper noted that “In a further assurance to an industry that an audience member termed the state’s ‘crown jewel,’ Malloy said that he is not in favor of moving to regulate beyond federal policy.”
The governor gave no indication that he would be willing to work with Connecticut’s wall-to-wall Democratic congressional delegation to lop off the Dodd-Frank bill some regulatory hydra heads. Nor has he been asked by the legacy media whether he intends to lobby other Democrats in the U.S. Congress to pare back onerous federal regulations on behalf of his new hedgie friends. The locution – “Let me very clear I’m not interested in more…” – was last used by the governor in multiple pre-campaign speeches with reference to tax increases. As it turned out, Mr. Malloy was not unfriendly to new taxes.
Showing posts with label Plan B. Show all posts
Showing posts with label Plan B. Show all posts
Sunday, September 25, 2011
Friday, August 12, 2011
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.
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.
Sunday, July 31, 2011
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.
“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.
Saturday, July 23, 2011
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
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:
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.
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.No Exit
"’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.”
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.
Wednesday, July 6, 2011
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.
“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.
Friday, July 1, 2011
Democratic Caucus To Malloy – Nyet
Plan B, held out to unions then in negotiations with the Malloy administration as a spook on a stick, was a thing of shark’s teeth and vampire fangs.
Senator Edith Prague, almost always friendly to unions, warned the rank and file members who ultimately rejected the plan that brimstone would fall from the sky should Plan A be rejected and, when the plan was rejected, Ms. Prague suffered what can only be described as a political breakdown; she said union members were mad to reject a plan described by a private union leader as an offer to die for. Jonathan Pelto, the voice of unionism in Connecticut’s left leaning press, writhed in indignation and bit his fingernails to the cuticles. The leader of the Democratic caucus in the House, Speaker Chris Donovan, up to this point a declared disinterested observer in the negotiations taking place between the Malloy administration and union leaders, put off plans to announce his candidacy for U.S. Rep. in the 5th District and pledged his services as facilitator in chief in the General Assembly, along with his counterpart in the Senate, President Pro Tem Don Williams.
After the unions defied Governor Dannel Malloy by rejecting Plan A, thought by many commentators in Connecticut to be considerably more benign than the fearsome Plan B, Mr. Malloy’s union unfriendly Plan B was submitted to a union friendly Democratic caucus in the General Assembly, which proceeded to defang it.
The number of layoff threatened by Mr. Malloy were pared back; a threat to fill positions left vacant by layoffs through the privatization of state jobs did not survive the chopping block; a measure to save expenses by reducing the number of sick days accrued by state workers from 15 to 10 per year did not make the cut.
Mr. Williams’ spokesman, Derek Slap, told reporters that Mr. Malloy’s attempt to rein in spending by suspending for two years a provision in the statues that restricts the privatization of state jobs and imposes a formal process before any state service can be contracted out to a private business was hacked out of Mr. Malloy’s revised budget by General Assembly leaders who were concerned that even a temporary suspension of the provision might cause administration officials of the Malloy administration to revert to the felonious behavior that resulted in a jail term for former Governor John Rowland.
The Democratic dominated General Assembly, over vigorous protests made by Republican leaders excluded from budget negotiations, did festoon the governor with extraordinary rescission authority for a limited period. Mr. Malloy may proceed with his layoffs, later to be fine tuned by the legislature. A deal struck at the last moment between Mr. Malloy and Democratic caucus leaders in the General Assembly allows legislators to reject from July 15 through August 30 any negotiated rescissions made by the governor.
Forbidden by union friendly Democratic leaders in the General Assembly from privatizing the jobs “lost” through layoffs, Mr. Malloy can only refill positions deemed necessary after the bloodletting has occurred by rehiring as consultants state workers he has laid off or by hiring new blood; and once one computes the payouts in pension and benefit costs owed to those laid off plus the somewhat reduced salaries and long term liabilities assumed by the state in the case of new workers, the net costs of the transaction forced upon the Mr. Malloy by leaders of the Democratic caucus in the General Assembly will still be unsupportable.
This happy news, once it sinks into the cranial matter of Ms. Prague and Mr. Pelto, should bring a spring to their step and a bloom to their pale cheeks. Bottom line: Malloy has been snookered by friends of labor in the General Assembly. A little tete a tete with departed former Governor Jodi Rell might have tipped Mr. Malloy off to what was coming round the bend at him at the speed of a new environmentally friendly bus.
It is said that -- somewhat like Lafcadio, the anti-hero of Andre Gide’s novel, “Lafcadio’s Adventures,” who stabbed himself in the thigh with a small knife whenever he did something that contradicted his much prized freedom of choice, so as not to forget the insults he was forced to bear -- Mr. Malloy has a lively memory. If so, the snookerers will have much to fear somewhere down the road; and, if not, they will have lived politically successful lives.
Senator Edith Prague, almost always friendly to unions, warned the rank and file members who ultimately rejected the plan that brimstone would fall from the sky should Plan A be rejected and, when the plan was rejected, Ms. Prague suffered what can only be described as a political breakdown; she said union members were mad to reject a plan described by a private union leader as an offer to die for. Jonathan Pelto, the voice of unionism in Connecticut’s left leaning press, writhed in indignation and bit his fingernails to the cuticles. The leader of the Democratic caucus in the House, Speaker Chris Donovan, up to this point a declared disinterested observer in the negotiations taking place between the Malloy administration and union leaders, put off plans to announce his candidacy for U.S. Rep. in the 5th District and pledged his services as facilitator in chief in the General Assembly, along with his counterpart in the Senate, President Pro Tem Don Williams.
After the unions defied Governor Dannel Malloy by rejecting Plan A, thought by many commentators in Connecticut to be considerably more benign than the fearsome Plan B, Mr. Malloy’s union unfriendly Plan B was submitted to a union friendly Democratic caucus in the General Assembly, which proceeded to defang it.
The number of layoff threatened by Mr. Malloy were pared back; a threat to fill positions left vacant by layoffs through the privatization of state jobs did not survive the chopping block; a measure to save expenses by reducing the number of sick days accrued by state workers from 15 to 10 per year did not make the cut.
Mr. Williams’ spokesman, Derek Slap, told reporters that Mr. Malloy’s attempt to rein in spending by suspending for two years a provision in the statues that restricts the privatization of state jobs and imposes a formal process before any state service can be contracted out to a private business was hacked out of Mr. Malloy’s revised budget by General Assembly leaders who were concerned that even a temporary suspension of the provision might cause administration officials of the Malloy administration to revert to the felonious behavior that resulted in a jail term for former Governor John Rowland.
The Democratic dominated General Assembly, over vigorous protests made by Republican leaders excluded from budget negotiations, did festoon the governor with extraordinary rescission authority for a limited period. Mr. Malloy may proceed with his layoffs, later to be fine tuned by the legislature. A deal struck at the last moment between Mr. Malloy and Democratic caucus leaders in the General Assembly allows legislators to reject from July 15 through August 30 any negotiated rescissions made by the governor.
Forbidden by union friendly Democratic leaders in the General Assembly from privatizing the jobs “lost” through layoffs, Mr. Malloy can only refill positions deemed necessary after the bloodletting has occurred by rehiring as consultants state workers he has laid off or by hiring new blood; and once one computes the payouts in pension and benefit costs owed to those laid off plus the somewhat reduced salaries and long term liabilities assumed by the state in the case of new workers, the net costs of the transaction forced upon the Mr. Malloy by leaders of the Democratic caucus in the General Assembly will still be unsupportable.
This happy news, once it sinks into the cranial matter of Ms. Prague and Mr. Pelto, should bring a spring to their step and a bloom to their pale cheeks. Bottom line: Malloy has been snookered by friends of labor in the General Assembly. A little tete a tete with departed former Governor Jodi Rell might have tipped Mr. Malloy off to what was coming round the bend at him at the speed of a new environmentally friendly bus.
It is said that -- somewhat like Lafcadio, the anti-hero of Andre Gide’s novel, “Lafcadio’s Adventures,” who stabbed himself in the thigh with a small knife whenever he did something that contradicted his much prized freedom of choice, so as not to forget the insults he was forced to bear -- Mr. Malloy has a lively memory. If so, the snookerers will have much to fear somewhere down the road; and, if not, they will have lived politically successful lives.
Friday, May 13, 2011
The Trouble With Plan A
There were several things wrong with Plan B, the most important of which was that it was not proposed by the Malloy administration as a serious effort to control spending, the pink elephant in budget room. But Plan A as currently constructed does not control spending either, because spending in Connecticut is driven by entitlements, long term union contracts and binding arbitration, cost escalators left untouched by Plan A.
Plan B was never more than a pistol held to the temples of union negotiators who had resisted the gubernatorial dictates of Plan A.
Conceived as a threat, Plan B was presented to the general public as a threat, and its conception and presentation were received by the general public in the same spirit. Indeed, Governor Dannel Malloy and both leaders of the Democratic dominated General Assembly, President of the Senate Don Williams and Speaker of the House Chris Donovan, repeatedly and roundly condemned Plan B even as it was presented, as a cruel default budget plan. Plan B was not Mr. Malloy’s preferred option, the governor said repeatedly.
State Senator Edith Prague, during her 28 years in the General Assembly a devoted union supporter, fairly fainted when she got a gander at Plan B, every Democrat’s mock-up of what they think a Republican budget might have looked like if union operatives had failed to turn out a sufficient number of votes in two of Connecticut’s principal cities during the gubernatorial election, which votes drove the election in Mr. Malloy’s favor by the slimmest of margins and prevented a Republican victory.
"This Plan B takes my breath away,'' said the vice chairwoman of the budget-writing appropriations committee.”It's so unbelievable what it would do to the state of Connecticut. I can't believe these cuts. This is the worst I have seen.''
Plan B passed along Mr. Malloy’s “shared sacrifice” to municipalities by threatening to cut state grants to towns. Among Democrats, it has been supposed that such cuts would result in higher property taxes. But, in fact, such cuts, accompanied by reductions in state mandates, easily could have resulted in cost saving measures within municipalities that might have rolled back than Plan A the tsunami of spending that threatens to beggar the state. Towns, through budget referendums, have been much more successful in reducing costs than have legislators in the Democratic dominated General Assembly.
When Republican leader John McKinney rose in the state senate to protest the Democratic hegemon that had produced a budget without a single Republican fingerprint on it, he touched very lightly on the recent strange doings within the Massachusetts legislature, dominated even more heavily by Democrats, “if one could believe such a thing,” than the General Assembly in Connecticut.
Perhaps to spare the fidgeting Mr. Williams seated beside him, Mr. McKinney did not let the words “repeal binding arbitration” fall from his lips. He spoke in general terms of the Massachusetts legislature having done things that would astonish and appall Democrats in Connecticut. In fact, the Massachusetts legislature, fitfully attempting to regain control of spending, had produced bill abolishing binding arbitration.
Binding arbitration, entitlements and long term union contracts have this in common: They all bind future governors and legislators and are, for that reason, profoundly anti-republican. At the center of republican government lies the notion that a legislature should not be able to bind its successor. The republican ideal is that the people, through their elected representatives, should be able to shape the future. Costly entitlements frustrate republican government. By way of example, the entitlement liabilities of Medicare, Medicaid and Social Security amount to $75 trillion, five times the Gross Domestic Product. The national debt is pegged upwards of $14 trillion; but toss in state and municipal debt and the figure balloons to $140 trillion. These are chains that bind. In attempting to repeal binding arbitration, the Democratic dominated Massachusetts legislature is seeking to throw off a few links of the chain to clear the future of roadblocks that prevent a profitable forward movement.
Managing Editor of the Journal Inquirer Chris Powell, who also writes a column in the paper, is one of the best budget commentators in the state. Mr. Powell has been calling upon the Democratic dominated General Assembly to abolish binding arbitration for years, to no avail. Recently his admonitions have had some success – in Wisconsin. And now in Massachussetts. The whirlpool of common sense is edging closer.
In a recent column the very title of which may cause Mrs. Prague to swoon -- “On to Plan B where we should have started” -- Mr. Powell greeted Plan B as a feint in the right direction. With some modifications favorable to unions – the Democratic legislature shaved nearly half a billion off state worker’s “shared sacrifice,” saved municipalities the trouble of pairing down union contracts and pushed effective reform beyond the governors first term -- the General Assembly has now installed Plan A, a much less serious reform package than Plan B. Because tax payers in Connecticut have no union, there were no negotiations that might have affected the tax increases – which includes a budget surplus -- Democrats have thrown like a yoke over the citizens of the state.
THIS BLOG WAS UPDATED SATURDAY, MAY 14
Plan B was never more than a pistol held to the temples of union negotiators who had resisted the gubernatorial dictates of Plan A.
Conceived as a threat, Plan B was presented to the general public as a threat, and its conception and presentation were received by the general public in the same spirit. Indeed, Governor Dannel Malloy and both leaders of the Democratic dominated General Assembly, President of the Senate Don Williams and Speaker of the House Chris Donovan, repeatedly and roundly condemned Plan B even as it was presented, as a cruel default budget plan. Plan B was not Mr. Malloy’s preferred option, the governor said repeatedly.
State Senator Edith Prague, during her 28 years in the General Assembly a devoted union supporter, fairly fainted when she got a gander at Plan B, every Democrat’s mock-up of what they think a Republican budget might have looked like if union operatives had failed to turn out a sufficient number of votes in two of Connecticut’s principal cities during the gubernatorial election, which votes drove the election in Mr. Malloy’s favor by the slimmest of margins and prevented a Republican victory.
"This Plan B takes my breath away,'' said the vice chairwoman of the budget-writing appropriations committee.”It's so unbelievable what it would do to the state of Connecticut. I can't believe these cuts. This is the worst I have seen.''
Plan B passed along Mr. Malloy’s “shared sacrifice” to municipalities by threatening to cut state grants to towns. Among Democrats, it has been supposed that such cuts would result in higher property taxes. But, in fact, such cuts, accompanied by reductions in state mandates, easily could have resulted in cost saving measures within municipalities that might have rolled back than Plan A the tsunami of spending that threatens to beggar the state. Towns, through budget referendums, have been much more successful in reducing costs than have legislators in the Democratic dominated General Assembly.
When Republican leader John McKinney rose in the state senate to protest the Democratic hegemon that had produced a budget without a single Republican fingerprint on it, he touched very lightly on the recent strange doings within the Massachusetts legislature, dominated even more heavily by Democrats, “if one could believe such a thing,” than the General Assembly in Connecticut.
Perhaps to spare the fidgeting Mr. Williams seated beside him, Mr. McKinney did not let the words “repeal binding arbitration” fall from his lips. He spoke in general terms of the Massachusetts legislature having done things that would astonish and appall Democrats in Connecticut. In fact, the Massachusetts legislature, fitfully attempting to regain control of spending, had produced bill abolishing binding arbitration.
Binding arbitration, entitlements and long term union contracts have this in common: They all bind future governors and legislators and are, for that reason, profoundly anti-republican. At the center of republican government lies the notion that a legislature should not be able to bind its successor. The republican ideal is that the people, through their elected representatives, should be able to shape the future. Costly entitlements frustrate republican government. By way of example, the entitlement liabilities of Medicare, Medicaid and Social Security amount to $75 trillion, five times the Gross Domestic Product. The national debt is pegged upwards of $14 trillion; but toss in state and municipal debt and the figure balloons to $140 trillion. These are chains that bind. In attempting to repeal binding arbitration, the Democratic dominated Massachusetts legislature is seeking to throw off a few links of the chain to clear the future of roadblocks that prevent a profitable forward movement.
Managing Editor of the Journal Inquirer Chris Powell, who also writes a column in the paper, is one of the best budget commentators in the state. Mr. Powell has been calling upon the Democratic dominated General Assembly to abolish binding arbitration for years, to no avail. Recently his admonitions have had some success – in Wisconsin. And now in Massachussetts. The whirlpool of common sense is edging closer.
In a recent column the very title of which may cause Mrs. Prague to swoon -- “On to Plan B where we should have started” -- Mr. Powell greeted Plan B as a feint in the right direction. With some modifications favorable to unions – the Democratic legislature shaved nearly half a billion off state worker’s “shared sacrifice,” saved municipalities the trouble of pairing down union contracts and pushed effective reform beyond the governors first term -- the General Assembly has now installed Plan A, a much less serious reform package than Plan B. Because tax payers in Connecticut have no union, there were no negotiations that might have affected the tax increases – which includes a budget surplus -- Democrats have thrown like a yoke over the citizens of the state.
THIS BLOG WAS UPDATED SATURDAY, MAY 14
Tuesday, May 10, 2011
Plan B Lifts Off
Governor Dannel Malloy today announced “After more than two months of talks, I'm afraid that my administration and the state employee unions have not reached agreement. Our talks have been respectful and forthright so far, and I remain willing to continue the discussions if the unions are willing to do so. However, we must all be willing to work toward a settlement that Connecticut taxpayers can afford in the long run.”
Negotiations between the governor’s office and union leaders were not entirely leak proof. There were indications that the talks had been going no where, but no one was willing to speak on the record. The sticking point from the union side was that negotiators were unwilling to succumb to the size of the givebacks, said to be $20,000 per year per state worker.
In the absence of an agreement – really more a capitulation than an agreement – Mr. Malloy announced today that lay off notices would be sent out immediately:
The talks likely stalled on benefit package reforms as well.
In response to Mr. Malloy’s most recent announcement, the State Employees Bargaining Agent Coalition this morning posted the following statement on its website:
Negotiations between the governor’s office and union leaders were not entirely leak proof. There were indications that the talks had been going no where, but no one was willing to speak on the record. The sticking point from the union side was that negotiators were unwilling to succumb to the size of the givebacks, said to be $20,000 per year per state worker.
In the absence of an agreement – really more a capitulation than an agreement – Mr. Malloy announced today that lay off notices would be sent out immediately:
“I have directed OPM to begin issuing layoff notices in an orderly fashion to the first 4,742 state employees. Those layoffs will result in savings of approximately $455 million. I've also directed OPM to begin the process necessary to cut an additional $545 million in spending; those cuts, many of them programmatic, will be spread across state government, and will, in all likelihood, result in additional layoffs.In his press release, Mr. Malloy said that the savings he hoped to realize in his negotiations with union leaders were “predicated on two principles: we need to achieve the short-term savings necessary to balance this budget, and we need long-term, structural savings in order to make state government sustainable. To do so, I am attempting to bring the benefits enjoyed by state employees -- wages, healthcare, and pension benefits -- more in line with those enjoyed by their counterparts in the private sector and in the federal workforce."
"I want to be clear that this is not the road I wanted to go down. I didn't want to lay people off, and I didn't want to make additional spending cuts beyond the $780 million in spending we've already cut.
"But I have no choice. I promised the people of Connecticut that I would change the way we do business in Hartford. I promised to deliver a budget that is balanced with no gimmicks, and I will.”
The talks likely stalled on benefit package reforms as well.
In response to Mr. Malloy’s most recent announcement, the State Employees Bargaining Agent Coalition this morning posted the following statement on its website:
"The discussions have been extraordinarily complex and demand our continued efforts to find mutual resolution.
"SEBAC is disappointed the administration has decided to begin issuing layoff notices. We have said time and again that laying off workers, whether in the public or private sector, and slashing vital public services will prove disastrous to our shared goal of creating jobs and rebuilding the middle class - especially at a time when our 9.1% unemployment rate is already higher than the national average.”
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