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Posts published in “Columns”

So, What to Do About “Rats”

Two so-called “rats” were inserted at the last minute into two massive must-pass pieces of legislation introduced and passed just hours before Connecticut’s constitutionally-mandated end of legislative session on June 7th this year. 

Only days later did legislators, with a few key exceptions, discover what was hidden in the 836-page budget bill and the 300-page “bond bill” on which they had voted. The rats overrode local decision-making on land use and zoning in two towns, Stamford and Middlebury. One rat was requested by a Republican, the other by a Democrat. Rats are a bipartisan problem, but a problem that only all-powerful Democrats can clean up.

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Supreme Court Decision on Harvard Misses Most Consequential Problem on Campus

July 2, 2023

The Supreme Court late-June decision striking down affirmative action in college admissions is a triumph for fairness and the quintessentially American belief that the best man or woman should win. Yet, it is largely an empty victory, and it misses the most consequential issue concerning diversity on college campuses today — political diversity.

July 3, 2023

Within a few hours of the court’s decision, Harvard announced its defiance, saying in Delphic words that the “principle” that Harvard follows “is as true and important today as it was yesterday.”

July 27, 2023

If Harvard thinks that its “principle” is diversity, then Harvard suffers from clinical self-unawareness. For it is anything but diverse. It is exceedingly liberal. The student newspaper, the Crimson, in its most recent annual survey found that “More Than 80 Percent of Surveyed Harvard Faculty Identify as Liberal.” Just 1.5 percent of the faculty identifies as “conservative.”

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Slow-Motion Train Wrecks… By the Numbers.

The silver lining, if there is one, in a proverbial slow motion train wreck is that the engineer may be able to recognize the disaster in its midst if it is unfolding so slowly, and then, do something to keep the train on the rails and apply the brake and prevent a total calamity.

At the national level, deficit spending is producing mountainous debt, skyrocketing interest cost and corrosive inflation. In Connecticut, plummeting tax revenue, a declining labor force and outmigration spell a return of the permanent fiscal crisis that Governor Lamont has claimed to have ended.

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Another Debt Ceiling Impasse Will Challenge the Next President Upon Inauguration

The Fiscal Responsibility Act that finally resolved the debt ceiling standoff might have solved a crisis in the short term — but it sets up a momentous challenge for whoever is elected president in 2024. The Act suspends the ceiling until January 2, 2025, at which time the new ceiling becomes whatever is the then-outstanding amount of national debt.

That means we will hit the new ceiling on the very day it is established. And whoever is elected president next year will start his term in the middle of a new debt crisis. Just two years after hitting the “old” ceiling last January, we will be right back into another standoff.

The only upside is that the new law could set the terms of debate in the 2024 presidential and congressional elections. It could force the presidential — and, for that matter, congressional — candidates to address what they will do on Inauguration Day in 2025, when the nation will be 18 days into a new suspension of borrowing.

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CT Budget Bulletin: Revenue is Still Falling

Here’s a budget update you won’t get from Hartford. Tax revenue this fiscal year will be down from the already drastically reduced projections issued just a month ago.

May 31, 2023

Back on May 1st, state budget masters reduced projected Connecticut state individual income tax revenue in two key categories by $2.0 billion over four years, including a half billion-dollar reduction for this fiscal year with only two months to go at that time.

A half billion-dollar annual reduction is a big reduction when total general fund tax revenue will average about $23 billion per year over the four years. For the current fiscal year, this represents not only a big reduction, but a big miss if you already have 9 to 10 months of actual data in hand. The tea leaves could and should have been read months earlier.

Even so, the big miss this year is actually going to be much bigger. The revised projections were for gross tax receipts. Yet, refunds have skyrocketed this fiscal year. As a result, net individual income tax receipts for Estimates & Finals (E&F) and the Pass-through Entity Tax (PET) are down much more than a half billion dollars.

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With No Time and No Deal, Yellen Should Have a Plan B

President Biden and Treasury Secretary Yellen seem to be playing a reckless game of chicken on the debt ceiling. Yellen has repeatedly said June 1 is the X date, while also saying she is not making other plans in case a deal is not reached. Yet, Uncle Sam has already reached the functional X Date - an unworkably low cash balance.

Wednesday, there was just $49 billion in the Treasury General Account (TGA), after $25 billion came out to pay regular weekly Social Security benefits, as it does every Wednesday. A year ago, there was $817 billion in the TGA.

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Temporary vs. Ultimate Default

President Biden and House Speaker McCarthy delayed their meeting on the debt ceiling from Friday to Tuesday. Maybe there’s progress as aides “negotiate.” Yet, the debt ceiling crisis is but a symptom of a much more consequential debt crisis in the U.S.

It is not too much of an exaggeration to say that Biden’s massive spending imperils the nation, risking an eventual fatal default, not simply a temporary immediately-curable default. The debt ceiling has served a valuable function in forcing the nation to confront its unsustainable spending habit and its mountain of accumulated debt.

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$2.0 Billion of Connecticut Tax Revenue Just Disappeared. Poof.

On May Day, Connecticut state budget masters wiped away $2.0 billion of expected tax revenue, without much notice.

May 3, 2023

May Day, May Day, we just lost $500 million annually over four years in a state with an annual general fund budget of just over $20 billion. That was not the general reaction, though it should have been.

The Nutmeg State cannot afford the sudden loss of $500 million per year, as projected in the new official state tax revenue forecast, jointly released Monday by the Office of Policy and Management and the Office of Fiscal Analysis.

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The ‘X Date’ for U.S. Debt Looks Like June 1

The debt ceiling standoff between President Biden and House Republicans has reached a moment of truth. Yesterday, suddenly and belatedly, Treasury Secretary Yellen warned that June 1 could be the “X date.”

That’s the date on which our Treasury can no longer employ “extraordinary measures” to keep the nation’s debt below the current ceiling and avoid default. Why is the deadline so much sooner than expected?

April tax receipts came in far below expectations, and Uncle Sam has been spending more and more money every month.

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