McKinney Blames Paid Sick Days For Manufacturing Losses

From WTNH:

Unilever announced Thursday that they will be closing their Clinton plant, leaving nearly 200 people out of work. The plant will be closed by the end of 2012, the company said in a written statement. The move will affect 49 salaried and 135 hourly employees.

"It is regrettable, but not surprising that Connecticut businesses are choosing to move jobs and opportunity to other states. As Unilever clearly stated, Connecticut is simply too expensive. This year, Governor Malloy and legislative Democrats have made it even more expensive to do business in Connecticut by passing the largest tax increase in state history, doubling the corporate tax surcharge, and imposing costly new mandates such as paid sick leave. We need to reverse these trends in order to have any chance at putting Connecticut's unemployed back to work," says Senate Minority Leader, John McKinney in a written statement.

Jon Green, Executive Director at Connecticut Working Families, released the following statement in response to Senator John McKinney's remarks on the closing of the Unilever plant in Clinton, CT:

Senator McKinney’s comments about the closing of the Unilever plant are just plain dishonest. He knows that the paid sick days law does not apply to manufacturers like Unilever.

Senator McKinney's political rhetoric has never created a single job in Connecticut. In his years as one of Connecticut’s most powerful politicians he has watched thousands of jobs leave our state without contributing a single honest and useful idea to remedy this situation. Instead he delights in each new announcement of job losses as an opportunity to score cheap political points.

Jon Green's remarks may be a little over the top, as McKinney was just throwing paid sick days in as to the environment in Connecticut, not specifically blaming it for the loss of jobs. McKinney has a history of blaming paid sick leave for manufacturing job losses, however, even though the law doesn't apply. So Green's being perturbed is understandable.

Also, McKinney attacking Malloy and the Democrats for raising taxes is beyond disingenuous. The huge deficits created during the Rowland/Rell Republican administrations had to be addressed in some way, and the tax increases passed were the least possible.

Playing Job Roulette

How much should a job cost?

When jobs are purchased by the governors of states that over-regulate the so called free market, which becomes less free the more regulations are piled on regulations, using their tax structures to transfer money from tax payers and small businesses to larger more government savvy corporations too big to fail, the cost of a job can be very dear.

President Barack Obama’s stimulus package, a scheme to gather taxes from the voiceless masses and pass them along to favored businesses and union groups, has simulated only the appetite of those in the federal government who consider it their business to soften the sharp edges of problems they themselves have have had a hand in creating.

The inability of the Obama stimulus package to reduce the jobless rate in the United States is the surest indicator that the president’s plan has failed. When number crunchers toted up the amount of stimulus spent per job produced, they arrived at a figure of $278,000. In most places outside the Beltway loony bin, that figure would have suggested an abysmal failure. But Washington moves away from its failures at a snail’s pace.

According to the the White House Council of Economic Advisors’ seventh quarterly report on the impact of the “stimulus,” just under 2.4 million jobs, both private and public, were created at a cost to date of $666 billion, which represents a charge to taxpayers of $278,000 per job created.

Tax Lawyer’s blog puts the cost benefit ratio in perspective: “In other words, the government could simply have cut a $100,000 check to everyone whose employment was allegedly made possible by the ‘stimulus,’ and taxpayers would have come out $427 billion ahead.”

This is not the shape of success. A malingering jobless rate tilting towards 10 percent, two years into an administration that considered 8 percent to be intolerable, cannot be considered a vindication of a stimulus plan that was supposed to return the economy to normalcy.

Here in Connecticut, Governor Dannel Malloy recently announced he had arranged a “performance-based” economic development package worth between “$47 million and $71 million to grow and retain jobs at CIGNA Corp. as the health insurer declared Connecticut its corporate home,” according to a report in CTMirror.

The state, in other words, is going to confer a tax and loan benefit on an insurance company that has promised to move 200 jobs from Philadelphia to Connecticut to comply with a job incentive program that showers benefits on companies that produce a minimum of 200 new jobs in Connecticut. CIGNA came in just under the wire.

"’Our corporate headquarters, effective today, is Bloomfield, Conn.,’ said David Cordani, the chief executive officer of CIGNA, a Fortune 500 company with 30,000 global employees and $21.3 billion in annual revenues.”

CIGNA’s history in Philadelphia dates to 1792. The city of brotherly love is not sweating the loss of 200 jobs, provided it retains 1,100 CIGNA jobs at Liberty Plaza in Center City. CIGNA, it should be noted, is a well established company with a rather large footprint in Connecticut as well.

Mr. Cordani plans to “create at least 200 jobs in the next two years, retain its 3,883 jobs in the state and make a minimum of $100 million in investments in its technology and real-estate infrastructure in return for a package of tax credits, a loan and job-training grants” worth, on the low end of the scale, $47 million.

At $235,000 per new job in tax benefits and loans, the transaction appears to be a good deal for CIGNA, though Commissioner of Economic Development Cathrine Smith, a former top executive of ING, another insurance giant, believes that the deal will in the long run be “revenue positive” for beleaguered Connecticut.

Big Business – Pfizer is a case in point – tends to use such tax breaks and loans as opportunities to perfect their business operations. When the tax breaks and loans run out, they may reconsider their options and occasionally move jobs to more cost effective states. Philadelphia need not morn its loss forever. Times and circumstances change, and large mobile companies, like the mercurial Mercury of mythology, have wings on their ankles.

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.

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.

Nancy DiNardo’s History Lesson

"The Democrats,” new Republican Party Chairman Jerry Labriola said after he had been installed by party central, “have created a record like no other I've seen since the enactment of the income tax in 1991. Our job is to highlight the contrasts between the Republican Party, which is the party of the private sector, the party of growth and opportunity, contrasted with the Democratic Party, the party of government unions, oppressive taxation and absolutely no job growth in Connecticut over nearly a generation."

Republicans, Democratic Party Chairwoman Nancy DiNardo responded, were attempting to shift responsibility for the state's fiscal mess: "Let's just ignore the fact that we've had a Republican governor for 20 years. Clearly, the voters of Connecticut are not fooled by the Republican rhetoric. The Republican Party has tried to cater to extreme interest groups and is out of step with the residents of Connecticut.”

Mr. Labriola did not answer that it was refreshing to hear Ms. DiNardo admit – if only indirectly and perhaps for the first time in her long tenure as Democratic Party chairwoman – that Democrats, a majority in the General Assembly for more years than Mr. Labriola could remember, were at all responsible for the current mess. Most non-partisans, both in state and nationally, would agree with the timeworn adage that governors propose while legislatures dispose.

Two Republican governors, beginning with Governor John Rowland’s tenure in 1995, have sent budgets to the General Assembly, which then adjusted the budgets according to their lights and sought approval from the governor, who either vetoed the budgets or signed them. That is the way budgets always have been passed in Connecticut.

Additionally, Ms. DiNardo perhaps misspoke when she said “… we’ve had a Republican governor for 20 years,” a span of time that would include as a “Republican” former Governor Lowell Weicker, the father of the state’s income tax. Mr. Weicker ran for governor as an Independent, governed the state as an Independent, as an Independent installed the state’s income tax, with invaluable help from Democratic legislators, and was not, as he himself pointed out in his auto-biography, “Maverick,” comfortable with his own party, a unease shared by most Republicans.

Mr. Weicker, who discounted in his campaign an income tax as a solution to the state’s debt crisis, defeated the Republican candidate, John Rowland, who garnered 37 percent of the vote to Mr. Weicker’s 40 percent; the Democratic candidate for governor, Bruce Morrison, received 21 percent, which indicates that Mr. Weicker received a large amount of his support from Ms. DiNardo’s party.


But all this is ancient history, and revisionists will always quarrel with the solid facts of history. Governor Dannel Malloy’s election is much more recent. His failed budget proposal is more recent still.

There are no Republican fingerprints on the wholly Democratic budget that recently came to grief after it had been rejected by state union workers. And the Republican Party in Connecticut has never been in the grip of “extreme interest groups.” Indeed, some argue that the old Connecticut GOP, the party that has over the years excited such amiability in left of center Democrats such as Ms. DiNardo and others, did not survive because it simply surrendered its character to Democrats.

Mr. Labriola brushed up against the point when he began to draw distinctions between Republicans and Democrats in his remarks: Democrats are “the party of government unions, oppressive taxation and absolutely no job growth in Connecticut over nearly a generation,” while Republicans are “the party of the private sector, the party of growth and opportunity.”

Those few lines went down Ms. DiNardo’s throat like a porcupine with its quills extended – because they actually mean something. She then did what revolutionary leftists usually do when their revolutionary programs, once put in to play, begin to sink the ship: She accused those bailing out the water of “extremism,” a favorite ploy of New York Senator Charles Schumer, who was caught in what he thought was a private phone call to leading Democrats explaining that he always attempts to cripple the opposition by labeling Republican solutions “extreme.”

Those few lines went down Ms. DiNardo’s throat like a porcupine with its quills extended – because they actually mean something. She then did what revolutionary leftists usually do when their revolutionary programs, once put in to play, begin to sink the ship: She accused those bailing out the water of “extremism,” a favorite ploy of New York Senator Charles Schumer, who was caught in what he thought was a private phone call to leading Democrats explaining that he always attempts to cripple the opposition by labeling Republican solutions “extreme.”

Nationally, Democrats, under the leadership of President Barack Obama and political strategists such as Mr. Schumer, declined to approve their budget, produced by a veto-proof majority in the U.S. Congress. At home in Connecticut, Mr. Malloy’s budget has been shot down in flames by state union workers, not minority Republicans in the General Assembly who were shut out of budget negotiations by Mr. Malloy, Democratic leaders in the General Assembly and union negotiators.

Crippled and stumbling into the long Fourth of July weekend, left of center Democrats, moderate Republicans and Independents in the state picked up their papers on July 1 and were met with the astounding news that the Democratic dominated General Assembly, surrendering its constitutional budget making roll in this the constitution state, had given Mr. Malloy extraordinary rescission powers to bring into balance a budget approved by the legislature weeks before it was torpedoed by state union workers. Mr. Malloy’s most modest savings proposal, a plan to eliminate union longevity payments, was rejected by union bought leaders in the General Assembly such as House Speaker Chris Donovan.

No, said Mr. Donovan, “We’re not going to bring it up here today.”

These extreme measures are not likely to be noted by Ms. DiNardo. Why should “the party of government unions, oppressive taxation and absolutely no job growth in Connecticut over nearly a generation,” seldom rebuffed by voters, be expected to surrender their thus far extreme revolutionary ways?

Malloy Has Other Options

As of now, the Governor's entire plan is to tell his department heads to save $700 million. The legislature is supposed to OK that plan. He says he has to act now (he doesn't) and that it's his only alternative (it isn't).

Jon Pelto asks why lay-off so many - renegotiate with the unions or at least implement the "savings" agreed upon, even if they have no basis in reality:

The Concession Plan was scheduled to save Connecticut $700 million next year.

That means a “hole” of $700 million.

One option would be to fix the concession plan and get it adopted. 57% of state employees already voted for it but that would require a commitment to the fundamental principles of collective bargaining.

So back to the problem at hand. Although the wage and pension portion of the Malloy/SEBAC agreement can’t be implemented (at least not until there is a re-vote), the plan included $170 million in “savings” that both sides agreed to that can and should be implemented.

Governor Malloy and his budget director agreed that the state could save $90 million in FY12 “by reducing agency procurement costs, making operations more efficient and identifying other cost-saving measures throughout state government”. In addition, separate of the new proposed wellness and disease management programs, the two sides agreed that a health cost containment committee would save $40 million in FY12 and $35 million in FY13.

And finally, they agreed that by using new technologies and reducing the use of outside consultants that state could save another $40 million in FY12 and $50 million in FY13.

Are all of these savings truly achievable? Maybe not, but these savings were good enough a couple of weeks ago for Malloy to include in his plan for next year’s budget. (Oh and they were good enough for the editorial writers who are now calling for massive layoffs).

So why did Malloy throw them out now? He is the one who says he is committed to making government more efficient.

The $700 million would drop to $530 million.

In addition, there is at least $150 million surplus built into next year’s budget with revenues continuing to grow and up to another $100 million hidden in the line item that pays retiree health benefits.

Those would bring the shortfall down even further – to $280 million or even less.

Why The Budget Failed

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

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

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

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

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

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

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

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

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

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

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

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

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