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Posts published in “Connecticut Newspapers”

Lamont Should Ignore His Budget Officials

The last time the stock market plunged as drastically as it did last year was 2008. Afterward in 2009, federal income tax collections from non-withheld (non-wage) income, mostly investment income from the 2008 stock market, plummeted 31%.

After last year’s stock market plunge, Connecticut budget officials are forecasting only a 15% decline, according to the new Consensus Revenue Forecast.

If past is prologue Connecticut should experience at least a 30% decline. That would put tax revenue $1 billion below the just-released new Forecast, wiping out a large chunk of the newly projected $3.1 billion budget surplus for fiscal 2023.

Yet, no one will know until April, when almost half of all such revenue arrives, following good years in the stock market, bad years and flat years. In the months beforehand, little non-withheld income tax revenue is ever received.  

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A Democrat Speaks Pure Republicanism

Connecticut Governor Ned Lamont, a Democrat, talked pure Republicanism in his State of the State address last week, eloquently articulating fundamental GOP principles.

Talk is cheap. Will he walk the walk, and will he be able to bring Democrats along on the walk?

During last fall’s election campaign, Lamont took personal credit for turning a $4 billion deficit into a $4 billion surplus. In last week’s address he was humbler, crediting the turnaround to the bipartisan budget reforms of 2017 that were adopted even before he announced his first campaign for the Governor’s Mansion.

Not only did he credit the budget reforms, but he doubled down on them, saying “Connecticut’s permanent fiscal crisis is over. It’s over, as long as we maintain the same fiscal discipline that served us so well over the last four years.” Fiscal discipline is a Republican virtue. It means Connecticut's various caps on spending and on use of revenue are to remain in place.

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A New Year’s Resolution for Uncle Sam

Friday before Christmas, Congress passed a massive $1.7 trillion omnibus spending bill for fiscal 2023. Lost in the furious debate about the overspending involved was the fact that the $1.7 trillion entails only discretionary spending. There’s another $4 trillion-plus of annual spending, which is mandated by law. Social Security spending alone will exceed $1.3 trillion this fiscal year. Total annual federal spending in fiscal 2023 will far exceed $6 trillion.

The nation is spending well beyond its means. The nation ran a $1.4 trillion deficit in fiscal 2022, following a $2.8 trillion deficit in fiscal 2021 and a $3.1 trillion deficit in fiscal 2020. That’s $7.3 trillion in just three years. If, as many economists predict, we enter recession this year, the annual deficit will begin to rise again.

Deficits, of course, mean that we have to borrow to finance spending. Over the past three fiscal years, the national debt exploded from $17 trillion to over $24 trillion.

Few people noticed, because interest rates were near zero, so there was little cost to this borrowing. Once the Federal Reserve began hiking interest rates, everything changed.

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Passing the Torch

For many Trump supporters, it was his policies that mattered. We suffered and endured his behavior, just as much as anyone else. Indeed, the headline in one Wall Street Journal oped read “The Only Good Thing About Donald Trump is All His Policies.”

Now, we can have his policies without his boorishness, and without the unfair vitriolic anti-Trump diatribes from the left, most of the media and from Republican Never-Trumpers. Trump inspired a whole cadre of impressive Republican presidential prospects, someone of whom is likely to carry the day in 2024 and carry his policies into the future, albeit with different possible successors having different notions of “all policies.”

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Declining Revenue Will Meet Higher State Employee Costs and Flight from High Energy Costs

Ned Lamont won a convincing victory in last week’s election. Congratulations are in order. Citizens should extend him the same honeymoon that his challenger would have enjoyed.

Yet, we must turn our attention to the future and the looming challenges we face.

First, the state is facing a serious decline in revenue.

Second, following on the heels of the costly recent SEBAC 2022 wage deal, state employee unions are going to come looking for improvements to the benefits side of their contract, which expires in 2027.

Labor always wants more, despite that Connecticut state employees already enjoy among the most generous benefits in the nation. Their health care benefits are the most generous in the nation by far. The negotiations are going to be tough and consequential.

Third, Eversource has warned that electric rates are going to increase 40%, which comes on top of the state’s already stratospheric energy costs. Likely, citizens and businesses will flee the state.

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Hopeful Versus Hapless

In most elections, an incumbent governor has an extensive record and a vision for the future. Not so in Connecticut’s gubernatorial contest, despite that Democrat Ned Lamont is campaigning as if he is the fiscal savior of the state. He is claiming to have turned a $4 billion deficit into a $4 billion surplus.

November 4, 2022

That would have happened even if the governor’s office had been vacant.

Lamont had nothing to do with the turnaround, which is temporary in any case.

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Germany Must Rearm, American Business Should Re-shore

Recently, I was seated at a dinner party beside a young lady whose life has spanned the globe. Let’s call her Amy.

Amy is an American who lived overseas for a significant stretch of her childhood, before returning to the U.S. for college. After graduation, she left again to attend graduate school.

Along the way, she met and married a European, who had hopscotched Europe and then traveled to the U.S. in his career pursuits.

Now, Amy and her husband live and work in Berlin.

The couple seem citizens of the world, their lives an idyl of globalism and their horizons limitless in an interconnected and interdependent international system.

Yet, today, we are seeing more of the downside of globalism. Beware any phenomenon embraced so passionately that it becomes an “ism.”

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Sophistry Masquerading as News in Connecticut

The Merriam Webster dictionary defines sophistry or sophism as “an argument apparently correct in form but actually invalid.”

This definition describes perfectly a recent newspaper headline that ran in several Connecticut newspapers in mid-September reading “CT on pace for another multibillion-dollar budget surplus.”

The subtitle got specific: Early projections from Gov. Lamont put state nearly $2.3 billion in the black this fiscal year.”

Certainly, the headline implied the “multibillion-dollar budget surplus” was a marvelous new development.

It wasn’t and isn’t. The surplus was forecast in early May when the official state budget was enacted.

The newspapers knew, or should have known, this.

A genuine news focus would have been the suspect nature of that stale forecast, given the plunge in the stock market upon which the state relies so heavily for income tax revenue.

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The State Labor Deal and the Resulting Retirement Wave

Ned Lamont would have voters believe that he has engineered a “Connecticut Comeback.” On his campaign website, he claims to have turned a $4 billion deficit into a $4 billion surplus.

Lamont has had nothing to do with the temporary improvement in the State’s condition. The transitory improvement is based upon billions and billions of one-time federal assistance that will run out in a matter of months and upon a gusher of individual income tax revenue derived from a stunning decade-long stock market rally that ended nine months ago.

Lamont did have one critical task. He had 100% control over the negotiation of the new state employee wage contract, the SEBAC deal. Over the next decade that deal will cost the state an estimated $6.4 billion.

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Not An Isolated Incident

Recently, an assistant school principal in Greenwich, Connecticut was caught on video avowing that he hires only progressive teachers. He explained that he won’t hire Catholics because they are too rigid, nor older teachers since they are too set in their ways, for him to be able to bend them to his mission of progressive teaching.

In Greenwich, he is probably an outlier. I live in Greenwich, and I have a second grader in the school system. He has had two great teachers and is just starting with a third of apparent great promise. Yet, most of the progressive education mischief occurs in higher grades, so I will reserve judgment.

The reality is that this is not a Greenwich issue. It is a national issue, more precisely a Beltway issue. The national teacher unions headquartered in Washington DC and the Biden Administration are very clearly pushing a left-wing agenda. The unions and Biden are doing everything possible to inject critical race theory (CRT) into the nation’s public schools, despite all their protestations to the contrary.

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