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The Red Line

Connecticut is $3.8 Billion Deeper in Debt… How Did We Get There?

Governor Lamont claims to be engineering the Connecticut Comeback. Not so fast. Immediately before he first took office in 2018, the state’s long-term debt was $83.4 billion. The latest state financial statements show $87.2 billion. The state is $3.8 billion deeper in debt.

February 15, 2024

Lamont claims to have improved the health of the drastically underfunded state employee pension fund (SERS) with $5.0 billion of special deposits to the fund. In 2018, SERS unfunded liability was $21.2 billion; last June 30th, it was $20.1 billion, indicating a meager improvement of $1.1 billion.

What happened?

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Harvard’s Gay Resigned For Good Reasons But Antisemitism Charges Miss the Mark

Harvard President Claudine Gay resigned this month, for good reasons. Foremost was her inability to muster a straightforward answer when asked in Congress whether Harvard should condemn calls for the genocide of the Jewish people.

January 6, 2024

There are other good reasons and one glaring exception. First the reasons. Over her career, she indulged, if not encouraged, the left-wing cancel culture at Harvard. On her watch, the college’s free-speech ranking dropped to last place among 248 colleges surveyed. Her resume of scholarly research is short and, apparently, riddled with instances of plagiarism.

Now the exception. She has been attacked most vociferously – and wrongly – for indulging alleged antisemitism on campus. Of this charge, she was not guilty; she was simply incompetent in her inability to defend the free speech rights of pro-Palestinian students and distinguish them from antisemitism.

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Furor Over Antisemitism is Trampling Free Speech

Wealthy Jewish financiers and national politicians have attacked university presidents for not restricting supposedly antisemitic speech on campus. Yet, previously, the attackers have condemned college leaders for restrictions on campus free speech.

December 26, 2023

Bill Ackman wants Harvard’s Claudine Gay fired. Marc Rowan has succeeded in ousting UPenn President Elizabeth Magill. U.S. Representative Elise Stefanik has gloated “one down [Magill], two [Gay and MIT President Kornbluth] to go.”

In an ironic example, Ackman’s extreme actions - demanding Gay’s ouster and doxing and trying to blacklist pro-Palestinian students - have served to resurrect a key element of free speech and academic freedom at Harvard, namely that the institution should not cave to the demands of outsiders, no matter how wealthy or powerful.

Yet, the overriding irony of Ackman’s actions is that they constitute the same effort to restrict on-campus speech that many alumni have criticized in recent years. Doxing and blacklisting are surely efforts to punish and silence speech.

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Fearful Symmetry, Futile Strategy; The Only Solution Is Peace

Palestinians cry “From the river to the sea,” while Israelis seize and settle the land from the sea to the river. The Times of Israel reports that an Israeli cabinet minister and his father, a rabbi, suggest the option of nuking Gaza and eradicating Palestinians, unavoidably evoking the Final Solution and the Holocaust.

November 30, 2023


The massacre at Kibbutz Be’eri, where 130 Israelis were slaughtered by Hamas on October 7th, recalls the documented 1948 massacre at Deir Yassin, where Jewish guerrillas executed over 100 Palestinian men, women and children.

Hamas and Hezbollah seem tragic descendants of last century’s Jewish guerillas, the Urgun and Lehi.

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Palestinians enjoying peace and tranquility in their own homeland from the river to the Green Line is the best way to defang the terrorist movements. How many families living in genuine peace will offer their children to be suicide bombers? To be terrorists? To live in tunnels in Gaza or caves in Southern Lebanon? Peace is the greatest threat to terrorists. It is time to carry out the threat.

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CT Revenue: Easy Days Are Over

On Monday, Connecticut’s budget forecasters released their first updated revenue forecast since last May, at which time they removed a whopping $2 billion of expected revenue from volatile individual income tax categories over a four-year stretch. The new forecast predicts further declines in these categories, wiping away another $750 million over the remaining three of the original four years.

While declining revenue is never good news, these drastic reductions represent a welcome return to budgetary prudence from the wildly over-optimistic revenue forecasts of fiscal 2023 and from Governor Lamont’s re-election campaign happy talk last year claiming to have ended the era of permanent fiscal crisis in the state.

The crisis is not over.

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A New Peace Proposal: A Protectorate on the West Bank Governed by a Coalition of Major Powers

After Hamas's heinous attack on Israel, President Biden - wisely - has been talking about peace in the Mideast, even as hostilities rage in Gaza, the West Bank and at the Israel-Lebanese border. Without a peace settlement, these hostilities are open-ended, as they have been for decades. Yet, Biden has resurrected the old idea of a Palestinian state under the Palestinian Authority. That plan is a dead letter. Instead, we should try an entirely new approach, a permanent international protectorate on the West Bank.

October 25, 2023

The protectorate would be established and governed by a multinational coalition which would take control of the West Bank and demilitarize it completely, replacing Israeli Defense Forces with international peacekeeping troops.

The Palestinian state is a casualty of two realities. First, Israel could never accept a fully sovereign Palestinian state on the West Bank high above Israel which is but six miles wide at its narrowest point. That would be an unacceptable existential risk for the Jewish state.

Nor would the Palestinians accept the emasculated version of a state contemplated in failed negotiations to date, a small demilitarized entity with IDF troops stationed on all its borders. That would be little different from the current status quo. Peace negotiations over the years have bogged down in fatally complex detail in attempts to square the circle of these irreconcilable positions.

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New York’s Fraud Law: Guilt, In Absence of Intent, Malice, Materiality, Damages or Actual Fraud

Let me say first that I am not a lawyer. Nor am I a supporter of Donald Trump for the GOP presidential nomination. Yet, I am troubled by the New York Executive Law § 63(12) (the “Law”) under which Donald Trump and his associates have been found to have committed fraud, his business licenses cancelled and various of his business units ordered dissolved within 10 days – all before a trial in which New York State seeks a whopping $250 million from The Donald.

This Law strikes me as dangerous, certainly to anyone doing business in New York State. As the order by New York Supreme Court Justice Arthur Engoron (“the Order”) acknowledges, no victim of Trump’s activities “lodged a complaint” or “otherwise claimed damages.” Usually, a murder conviction requires that the victim’s body be found. In the Trump case, the body is alive and kicking.

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There’s Nothing Slow-Motion About Uncle Sam’s Financial Train Wreck

Casey Jones might as well be at the throttle. Certainly, there’s nothing slow-motion about Uncle Sam’s financial train wreck. The crisis is broadly consequential. In the eleven months through August, net interest on the national debt has hit $630 billion, with $69 billion paid last month. It will end the full year at double the $351 billion paid just two years ago in fiscal 2021.

The increase is stunning, but predictable. So too is next year’s increase. With the Federal Reserve keeping rates “higher for longer,” net interest will hit almost $850 billion next year and top $1 trillion in fiscal 2025, if the current interest rate environment persists.

The environment may not persist, since debt throughout the economy is repricing at interest rates that are multiples higher than those prevailing in the easy-money decade of the 2010s. Businesses and consumers may buckle under the burden. That would bring recession and lower rates, despite current economic commentary to the contrary that sees, instead, a “soft landing” ahead.

The skyrocketing rise in interest costs has some of the fascination of a runaway freight train, transfixing observers. Yet, we should ignore the spectacle to focus instead upon the damage being wrought

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America Is Headed Toward Annual Interest Outlays of $1 Trillion a Year

After the downgrade of America’s debt by Fitch Ratings, a drumbeat of negative assessments has followed in respect of how deep in the hole our country has plunged. That’s a good thing, since net interest on the debt is escalating rapidly on a track to hit an unsustainable and crippling $1 trillion in fiscal 2025. 

This fiscal year net interest is headed toward $700 billion, having already hit $561 billion in ten months, with $67 billion paid in July. Interest rates are at the highest levels in decades and likely to stay there, with the Federal Reserve saying it will hold rates “higher for longer.” Rates may climb further, as they have in recent days.

Most economic forecasters now see uninterrupted economic growth rather than a recession that might bring rates down. Monetary experts are considering whether current rates are a new normal and whether the neutral rate of interest and the real rate of return may be higher than previously thought. 

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Connecticut By the Numbers

Six months ago, I authored a column about the fiscal condition of Connecticut, focusing on a table of statistics which The Wall Street Journal had used to compare New York and Florida.

In this updated edition, the table compares Connecticut to its two big neighbors, New York and Massachusetts, and to the entire nation. In addition, the table is reorganized into sections covering demographics, the economy, taxation and factors important to businesses in choosing operating locations. These are the most important dimensions to measure the vitality of a state.

Demographics: The populations of Connecticut and New York are barely growing. While Connecticut enjoyed a short burst of net in-migration – mainly from New York driven by the pandemic, that appears to have reversed in data from CT Data. The decline is confirmed by the fall in Connecticut’s U-Haul ranking (ratio of incoming vs outgoing moving vans). Massachusetts seems an anomaly likely based upon college students coming and going.

Economy: Connecticut’s economy is small and barely growing, and the labor force is shrinking.

Taxation: Relative to neighbors, Connecticut is a haven for high income individual taxpayers, about equivalent insofar as sales tax is concerned and an onerous place to own a home.

Business (Re)location:  On business location decisions, Connecticut is uncompetitive, even regionally. Electricity costs are twice the national average, and the highest in the region. Traffic congestion is widespread in the entire Western (populous) half of the state. The corporate tax rate (at least for large companies) is high, including the always-extended 10% surcharge. Though progress has been made on unfunded obligations, courtesy of massive federal COVID assistance and a long boom in the stock market, the state employee pension fund remains among the lowest funded in the nation.

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