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Looming Crisis in Connecticut

Recent public announcements concerning Connecticut’s fiscal condition have come out in separate disjointed fashion. Taken together, they spell impending crisis.

October 12, 2020

It is no surprise that the state is facing an enormous deficit this year (and into the future), due, in part, to the sudden economic shutdown occasioned by the pandemic.

However, in larger part, the crisis has been long coming and widely anticipated. It is a function of the bill coming due for decades of paying state employees massively overgenerous, yet woefully underfunded, compensation. It is unlikely that Connecticut will have money both to continue state operations and to fund employee retirement benefits.

October 12, 2020

On the first of this month, Governor Lamont released his official deficit mitigation plan, as required after Comptroller Kevin Lembo made the obvious official, namely that the state faces a deficit of $1.8 billion in the current year’s budget of approximately $21 billion.

No one really knows where the state and the country are headed economically. The good news is that the state’s rainy day fund has grown to $3 billion since 2017. Lamont said he would use most of the fund to close the budget gap, leaving little for the next fiscal year and beyond.

October 12, 2020

Just days before, the governor announced his hiring of Boston Consulting Group to find $500 million in annual state savings, primarily from workforce attrition. The goal is to automate or eliminate many job functions, so that the expected retirement before mid-year 2022 of an estimated one-third of the state’s 49,000-person workforce will require the fewest possible replacements.

Of course, Lamont could have saved one-quarter of BCG's savings target by using his emergency powers to cancel the $135 million state employee pay raise last July 1st.

October 19, 2020

That would have caused employees little pain, as demonstrated by a recently released Yankee Institute study, which found that Connecticut’s state and municipal employees (excluding teachers) are paid about $20,000 per year more than their private sector counterparts. That translates into an aggregate annual premium of almost $1 billion for 49,000 state employees, assuming they and municipal employees enjoy equivalent pay.

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Lamont Failed to Protect Lives and Livelihoods. Why Extend His Absolute Rule?

Governor Lamont has extended his emergency powers through February 9 of next year, despite his disastrous results so far in wielding those powers. Connecticut has sustained the fourth highest state death rate from coronavirus (126 per 100,000 citizens, according to Statista).

Does this record justify the longest extension of emergency powers in the nation? According to the National Governors Association, no other state governor has emergency powers extending into 2021 and only two are empowered even into December.

The challenge in exercising extraordinary executive authority is to limit the spread of coronavirus while inflicting the least possible economic damage.

Lamont has achieved a particularly poor balance. He has overseen an extremely high death rate, while imposing one of the strictest business shutdowns in the nation, undoubtedly with ultimately dire economic impact.

Lamont does not have the excuse of the three states with deadlier outcomes, New York, New Jersey and Massachusetts with their large densely populated urban centers. Connecticut is a suburban and rural state.

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Facts About Police Behavior Matter

The News Division of The Wall Street Journal Charged The Journal’s Opinion Staff With “Disregard of Evidence”... It Was News Which Was Guilty of That Charge

In his nomination acceptance speech, Democrat Joe Biden cited “systemic racism” as an established fact, despite that the evidence does not support that sweeping notion -- most significantly, not in policing. Such loose talk is incendiary.

This summer, the same talk raged inside The Wall Street Journal, eventually spilling into public view. Almost three hundred members of the News division signed a letter to Journal CEO Almar Latour alleging “lack of fact-checking and transparency and apparent disregard of evidence” in the Opinion division, primarily concerning the early June publication of an op-ed by Heather Mac Donald entitled The Myth of Systemic Police Racism.

In the interest of full disclosure, The Journal’s Opinion section has published several of my opinion columns.

Each word in the headline of Mac Donald’s op-ed is important. The title does not call police racism a myth, just systemic police racism. It does not say there are no racial differences, or disparities, in policing.

The headline frames assertively, but fairly and accurately, the column’s central statement that “a solid body of evidence finds no structural bias.”

The News department accused Mac Donald of “cherry picking” a study by Harvard economist Roland G. Fryer, Jr. by referencing only Fryer’s finding of no racial disparities in fatal officer-involved shootings (FOIS) while making no mention of Fryer’s finding of substantial racial disparities in police use of non-lethal force.

Well, in mid-June, Opinion published an op-ed by Fryer, giving him the opportunity to outline his differing findings on FOIS versus use of non-lethal force and to say “People who invoke our work to argue that systemic racism is a myth conveniently ignore these statistics [on non-lethal force].”

Yet, in the next sentence, Fryer said “Racism may explain the findings, but statistical evidence doesn’t prove it. As economists, we don’t get to label unexplained racial disparities ‘racism.’” Sure sounds like Mac Donald’s argument, which Fryer had just criticized.

The News department also complained that Mac Donald mischaracterized a 2019 study (Johnson and Cesario) which found that minority victims were not more likely to have been shot by White officers.

In April 2020, the authors reconfirmed their findings but corrected an overreaching sentence in the study’s “significance statement,” changing “White officers are not more likely to shoot minority civilians…” to say a White officer’s victim “was not more likely to be of a racial minority.”

The change was necessary to recognize that “likelihood,” or probability, of being shot must include data about shots and “non-shots,” just as coin toss probability requires data for both heads and tails, and, since the study’s database was comprised only of fatal “shots” (not even including non-fatal shots) they couldn’t speak to probability of possible future FOIS outcomes, but only about the characteristics of actual FOIS outcomes.

Nevertheless, this more accurate and limited portrayal of their findings did not alter the fact that the authors did not find racial bias. Confoundingly, the authors “retracted” their study (whatever that means) in July, because “our work has continued to be cited as providing support for the idea that there are no racial biases in fatal shootings, or in policing in general.”

Except that, as a study that attempted to find racial bias in FOIS and did not, their work does support previous evidence (including Fryer’s) not finding racial biases in FOIS.  

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The Big Lie About CT State Employees’ Sacrifices, Concessions and Give-Backs

State employees feel entitled to pay raises as if they're a birthright. If they don’t get one, that's called a “saving.”

Ever since former Governor Dannel Malloy announced famously to a state employee union rally in 2014 that “I am your servant,” the general public in Connecticut has grown increasing aware and upset about excessive state employee compensation.

Late last month, I wrote a column calling upon Governor Lamont to use his emergency powers to cancel, suspend or delay a large pay raise that all state employees were about to receive on July 1st, a pay hike that Lamont himself had called unfair in the context of massive private sector job losses. State employees are protected from job losses by a contractual no-layoff guarantee they have enjoyed since 2011.

The state employee unions pushed back against my column, including in a letter to the editor by Ronald Nelson, President of AFSCME Local 749 representing 1,500 state judicial and criminal justice employees, most of whom have to have been idle during recent months because state courts have been closed.

Nelson identified an error in my column while making one of his own. We’ll get to that.

Of far greater significance, Nelson repeated an astounding claim made by Dan Malloy in 2017. Malloy claimed a whopping $24 billion in “real savings” over 20 years from concessions allegedly made by state employees in the 2017 agreement that he negotiated with the State Employees Bargaining Alliance Coalition (SEBAC).

This outlandish claim has gone largely unchallenged. Indeed, Democrats codified it in a state law requiring Comptroller Kevin Lembo to prepare an annual report on the actual savings achieved.

The largest portion of Malloy’s $24 billion claim were wage savings, which cumulated to $9.6 billion through 2037, according to Malloy and his Office of Policy and Management.

The falsity in Malloy’s claim is not buried in complex numbers. It rests upon an outrageous assumption, namely that state employees are entitled to raises each and every year as if annual raises are the virtual equivalent of a birthright. If employees don’t actually get a raise, the raise they don’t get is called a “saving.”  

So, who established the amount of the “raise they didn’t get” in 2017? Malloy did. In his budget proposal, he proposed hundreds of millions of raises. Then, he negotiated wage freezes and called the difference “savings.”

How do we know this? From the documentation that OPM published in support of Malloy’s claimed savings. On page 1, entitled “Source of SEBAC Agreement Savings Estimates,” under a sub-header of “Wage Estimates were developed by OPM,” it states “Elimination of potential FY 2017, 2018, and 2019 increases: Removes all of the proposed RSA increase in the Governor’s recommended budget: $300.6 million in FY18 and $486.2 million in FY 2019.”  [Emphasis added.]

The raises which state workers “didn’t get” were simply figments of Dan Malloy’s imagination – they were “potential,” “proposed” and “recommended.” There was no existing wage contract between the state and state employees under which workers were legally entitled to actual raises that, then, they gave up in negotiations with Malloy.

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Connecticut’s Coddled Class Is Protected by a Feckless Governor

The State Employee Gravy Train Rolls Along. With His Emergency Powers, Gov. Lamont Could Cancel the Union Pay Raise -- But He Hasn't the Courage

Hartford Courant, June 26, 2020; CT Examiner, June27. 2020; Journal Inquirer, June 30, 2020 -- Connecticut Governor Ned Lamont, a Democrat, sees the unfairness of about 50,000 state employees getting a $350 million pay raise next week (on July 1st) while almost 600,000 private sector workers in Connecticut have lost their jobs. He said as much at a mid-June food bank give-away.

It’s not just pay: the state workforce enjoys a contractual no-layoff guarantee through 2021 as well as gold plate health care and pension benefits.

Yet Lamont can’t bring himself to cancel, suspend or even delay the raise, which follows a raise of roughly similar amount a year ago.

As a result of the pandemic, Lamont has the emergency power to override any and all state laws -- even provisions of the U.S. constitution such as freedom of assembly, including the right to gather in houses of worship. Yet he says he lacks the power to do more than ask the unions to forgo the raise? Talk about fecklessness.

The Yankee Institute reports that Democrat governors in New York, Pennsylvania and Virginia have temporarily suspended raises or frozen pay for state employees. Without emergency power, President Obama reminded everyone that “I have a pen and a phone.” One wonders what Lamont has – or hasn’t.

This issue of fair pay is not new. The gap between the compensation of Connecticut state employees and the state’s private sector workers is enormous and has been for at least a decade and a half, despite the whining of state employees, union bosses and union negotiators about all the “sacrifices” they’ve supposedly made. In 2010, the state conducted its own study of total compensation, finding average state employee compensation of $105,000 versus an average of $74,000 in the state’s private sector. That’s a whopping 42 percent compensation premium in favor of state employees.

In 2014, a study by the American Enterprise Institute (AEI) found the same 42 percent compensation premium – the biggest of all 50 states. It wasn’t just benefits. Connecticut was the only state where average state employee wages were higher than average private sector wages. Note, this was a 50 state study, so the AEI researchers couldn’t “cook the books” to make Connecticut, or any state, look good or bad.

In 2019, AEI conducted another 50 state study, this time comparing all public sector employees (state and municipal) to private sector workers. Based upon the latest data (2017), Connecticut's pay gap had widened to 51 percent. Notably, the 2017 data predates the 5.5 percent raise last year and the 5.5 percent wage increase next week, which will propel state workers even further ahead of the state’s beleaguered private sector workers.

This compensation disparity is unfair no matter how or when you look at it. And Lamont won’t act, and the unions won’t concede?

Instead of offering concessions, the unions have mounted a campaign to deflect attention from their upcoming wage hike. SEIU 1199 is running a TV advertising campaign highlighting the heroic work of essential state workers in fighting coronavirus. The ad overlooks all the non-essential state workers still drawing pay checks while idle at home, albeit through no fault of their own. The ad forgets that the overwhelming majority of frontline workers are municipal employees (police, fire and EMTs) and private sector employees (doctors and nurses).

Legislatively, the unions and their apologists are campaigning for the state to raise taxes on “the rich” That doesn’t address unfairness. Raising taxes on the rich won’t close the gap between state and private sector compensation.

Moreover, the unions forget that the rich are included in the compensation numbers. State employees out-earn the average of all private sector workers, including those high earners, which just dramatizes how much more state employees earn than “99 percent” of private sector workers.

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One Size Does Not Fit the Virus

The attempt to protect everyone left the most vulnerable nakedly exposed

The nation and Connecticut are reopening fitfully and unevenly from a shutdown that many think should not have happened – many including Pulitzer-Prize-winning columnist Thomas Friedman of the left-leaning New York Times and Dr. David L. Katz, a Connecticut MD and an expert with a public health degree from Yale.

Our “one-size-fits-all” shutdown policy is strange in the face of a virus which afflicts different population segments in such wildly different ways. For those over age 65, who comprise only 16 percent of the country’s population, the virus has been devastating. This age group has sustained about 80 percent of nationwide deaths – 94 percent of Connecticut fatalities have hit people over 60.

Additionally, it is just plain common sense that people with serious prior conditions would be at greater risk, and that transmission would be greatest in densely populated urban areas and in communal residential settings for seniors. An estimated one-third of national fatalities occurred in nursing homes, and almost 70 percent of Connecticut deaths occurred in nursing homes and assisted living communities.

To have imposed a uniform stay-home-shutdown policy was like a shoe store selling only size-8 shoes.

Before the U.S. shutdown began, data out of China and Italy were unambiguous that the virus attacked the elderly and spared those younger. Moreover, the first U.S. outbreak occurred at a nursing home in Washington State.

Tragically, the attempt to protect everyone left the most vulnerable nakedly exposed. A central precept of medicine in the context of scarce resources is triage. God knows, we had scarce resources as the pandemic broke out. When everyone can’t be saved, triage means focusing policy, effort and resources in a manner designed to maximize survivors – in the case of this virus, that means protecting those most clearly vulnerable.

Instead, nursing homes were overlooked at best, and, even worse, in New York and some states, governors forced them to admit infected seniors. Will these governors be held to account?

From the start, many saw a targeted approach without a total economic shutdown as a better approach. Unfortunately, partisanship has developed, with most Democrats supporting the universal stay-home-shutdown policy and many Republicans the targeted alternative. So, looking at the targeted alternative through the eyes of Thomas Friedman may help.

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Trying to protect everyone, we left the most vulnerable exposed to the virus

A total shutdown was unnecessary, since most Americans' risk of serious illness is extraordinarily low

In the Senate hearing last week on the country’s response to the coronavirus pandemic, Sen. Rand Paul (R-Tenn.) challenged the preternatural influence of Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases (NIAID), saying: "You are not the end-all.”

Paul was rude, but right. The nation has become transfixed by Fauci and his approach to the pandemic, which Paul described accurately as a “one-size-fits-all” policy. Almost the entire nation has been ordered to stay home and socially distance, and almost the whole economy has been shut down. You can’t get more one-size-fits-all than that.

It is a marvel that the nation has followed such a uniform policy in the face of a virus which afflicts different population segments in such wildly different ways. Over three-quarters of all serious cases and deaths have befallen people over age 65, who comprise only about 16 percent of the population. And it is just plain common sense that people with serious prior conditions would be at greater risk, and that transmission would be greatest in densely populated urban areas and residential settings. To offer a uniform policy is like a shoe store selling only size-8 shoes.

The dramatic imbalance was clear before the U.S. shutdown began. Data out of China and Italy were unambiguous that the virus attacked the elderly and spared those younger. Moreover, our first reported outbreak occurred at the Life Care Center nursing home in Washington state, i.e., among seniors in a dense residential setting.

Tragically, the U.S. has failed to protect precisely those population segments whose high risk was obvious from the start. While the damage already sustained – both in terms of lives and livelihoods – cannot be undone, it need not be compounded. From the start, many people saw a targeted approach without a total economic shutdown as a better approach – and they still do.

Unfortunately, partisanship has crept into the debate over the best policy, with Democrats supporting Fauci and many Republicans the targeted alternative. Let’s look at the targeted alternative -- not as presented by a Republican or a conservative but, rather, by Thomas Friedman, renowned opinion columnist for The New York Times, a generally left-leaning newspaper.

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It’s Not Stimulus, if the Economy Remains Closed

It is not “stimulus” if there’s nothing to stimulate. Most states have been under stay-home-shutdown orders for almost seven weeks, and only a few plan to reopen before mid-May, so the “stimulus” bills are really just “bridge” bills – constituting a combined $2.7 trillion bridge to an uncertain future date when 30 million newly unemployed Americans can go back to work and businesses can re-open.

Moreover, the bridge isn’t even fully built. Many citizens have not received their $1,200 “stimulus” checks, and many small businesses haven’t received Payroll Protection Program loan funds intended to cover eight weeks of payroll. Many never will, because the program is oversubscribed.

So a bridge designed to span an eight-week gulf isn’t complete, even as the gulf is extending to ten weeks and more. So, "stimulus” is a cruel misnomer. Many workers and businesses will not survive or be able to revive. States that prolong the shutdown based upon “an abundance of caution” are creating an overload of tragedy and danger instead.

For some areas, an extended shutdown may make sense, most obviously the immediate New York City area. In other areas, particularly rural areas where social distancing is inherent, it probably does not.

We should remember that the objective of the extraordinary stay-home-shutdown measures was to flatten the curve, not eliminate it.

Even in hard-hit New York, Governor Cuomo has acknowledged that the curve has flattened. The US Comfort hospital ship sent to New York City never reached capacity and has departed.

The spread of the virus has been slowed and kept within hospital and medical capacity, so flattening has been achieved, and extreme measures should be lifted – and soon.

We should reopen the same way we shut down, namely here and there, based on conditions on the ground, except, of course, in reverse sequence, starting where conditions are the best. Dr. Anthony Fauci, Director of NIAID, and U.S. Surgeon General Jerome Adams have said as much in White House briefings.

However logical, this may not be easy. As the crisis has unfolded, a natural and admirable spirit of unity has developed. However, unity should not be translated into uniformity. The nation is not uniform, nor are individual states.

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It’s Not Stimulus, If There’s Nothing to Stimulate


We should Re-Open The Economy The Same Way We Shut it Down: Here, There and, Then, Everywhere -- And Soon.

The Hill, April 16, 2020... It is not “stimulus” if there’s nothing to stimulate. With almost all states having ordered citizens to stay home and most businesses to shutter, the coronavirus “stimulus” bill passed by Congress and signed by President Trump on March 27 is really a “bridge” bill -- a bridge to an uncertain future time when people can go back to work and businesses can reopen.

If the shutdown goes too long, some workers and businesses may not survive or be able to revive. If it goes too long, the $2.2 trillion may be exhausted in the “bridge” phase, leaving nothing for an actual stimulus phase. A prolonged shutdown based upon an “abundance of caution” may carry instead an overload of danger.

The president has reiterated a very general hope to restart the economy on May 1 and,, on Wednesday, he said some states may be able to open earlier. Other states have leapfrogged beyond that, however, and adopted much longer shutdown periods; Virginia, for example, has a shutdown order through June 10. That may make sense for some areas, most obviously the immediate New York City area; in others, particularly rural areas, it probably does not.

We should remember that the objective of the extraordinary stay-home measures was to “flatten the curve” of infection, not to eliminate it. Once the spread of the virus has been slowed to keep it within hospital and medical capacity, that goal will have been achieved and extreme measures should be lifted. In his daily briefings, Gov. Andrew Cuomo (D-N.Y.) has said the curve of infection appears to be flattening in the New York City metropolitan area, the acknowledged epicenter of the crisis.

As we approach the time to reopen the country, the larger question is how we should restart our economic engines. We should reopen the same way we shut down -- namely, here and there based on conditions on the ground but in reverse sequence, starting where conditions are the best. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, and U.S. Surgeon General Jerome Adams have said as much in White House briefings.

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Time for CT State Employees to Give Back

Republican American, CT Examiner, Journal Inquirer - April 4-6 ... For the second time in roughly a decade, over 100,000 private sector workers in Connecticut have lost their jobs, while not a single state employee has been laid off in either nstance. For almost the entire decade, state workers have enjoyed contractual no-layoff guarantees, presently extending to 2021.

Not only that, following the Great Recession, state workers got three 3 percent annual pay raises, and, now, they are to get a 3.5% wage hike in just three months – on the heels of a 3.5% pay raise last July 1st.

That’s unfair, almost cruelly so in face of the unfolding economic ravages of COVID-19.

Union leaders talk about “sacrifices” by state workers. That's shameless disinformation.

Governor Lamont should place a call immediately to Daniel Livingston, the chief negotiator for the State Employee bargaining Alliance Coalition (SEBAC) representing unionized state workers, and demand that workers forgo the July 1st pay raise and that retired state workers give up cost of living increases for the next decade at least.

The issue of fairness and social justice does not involve only the element of shared sacrifice in times of hardship. For
almost two decades, Connecticut state employees have enjoyed amongst the highest pay and benefits among state workers nationwide.

Their compensation has been
significantly higher than that of state’s private sector workers in all years – good and bad. In 2010, the state’s Commission on Agency Options looked at 2008
compensation data and found average state worker wages of $65,746 and benefits of $39,752 versus average private sector wages of $59,313 and benefits of
$14,861 – for a staggering compensation premium of more than $31,000, or 42%.

In 2014, scholars at the American Enterprise Institute (AEI), Andrew Biggs and Jason Richwine, looked at 2009-2012 data and found that very same premium of 42%, which was the highest of the 50 states. The next highest premiums were 35%, 34% and 26% for Pennsylvania, New York and Illinois, respectively.

In 2019, AEI’s Biggs compared private sector compensation to public compensation at all levels of government in all 50 states. From 1998 to 2017, private sector worker compensation grew only 38%, lagging compensation for federal workers, state and local workers, and teachers which grew 67%, 44% and 40%, respectively.

Biggs found that Connecticut state and municipal workers’ compensation grew 77% over this period compared to a 6% increase in the state’s private sector. In 2017, Connecticut public sector workers enjoyed a whopping 51% compensation premium over the state’s private sector workers.

This is a gross social injustice, but it is more than that. Public sector compensation has overwhelmed the state budget
and economy.

Public sector workers should embrace this reality and realize that it imperils their own jobs, wages, and health care and retirement benefits.

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