By Chris Powell
Even as state government purports to be rolling in money, much of it emergency aid from the federal government, Connecticut is trailing the country in still another economic measure: income growth. The U.S. Bureau of Economic Analysis says personal income grew nationally by 7.4% last year but in Connecticut by only 5.8%.
Government in Connecticut grows more prosperous, with plenty of raises and even bonuses for its employees. But the state’s private sector, from which taxes are drawn, is still struggling. Recent events in the General Assembly provide some explanation.
State government owes the federal government about $800 million for principal and interest on money borrowed to pay unemployment compensation during the virus epidemic. Ordinarily the debt would be paid by raising unemployment fund taxes on businesses. But having been badly hurt by the epidemic, many businesses are not rolling in money, so they want state government to help repay the unemployment fund loan.
After all, businesses didn’t cause the spike in unemployment during the epidemic. That was caused by government’s own closing orders.
But the president of the Connecticut AFL-CIO, Ed Hawthorne, opposes using state government’s surplus to pay off the unemployment fund debt. He is urging the legislature to increase unemployment insurance taxes and spend state government’s surplus on hiring more government employees, most of whom are members of AFL-CIO-affiliated unions and thus organized against the government and the public.
State government’s hostility to the private sector was also manifested last week when the legislature’s Labor and Public Employees Committee, dominated by extreme-left Democrats, approved bills to award unemployment compensation to strikers and to prohibit employers from replacing strikers with permanent new hires.
Unlike other recipients of unemployment compensation, strikers have not lost jobs through no fault of their own. They left work voluntarily. Additionally, strikers are not available for long-term work elsewhere, a traditional requirement for unemployment compensation. Unemployment compensation for strikers pays people not to work.
After excessive taxation, subsidizing strikes may be government’s best way of inducing business to leave.
The striker bills will challenge Governor Lamont’s posture as a moderate.
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CONGRATS FOR NOTHING: State government last week congratulated itself for establishing a new program to do for people what they easily could do for themselves at no cost — set up an individual retirement account, or IRA.
The program is called MyCTSavings and will be a retirement savings plan employers will be required to offer if they are not already offering one. Employees will be enrolled in the plan automatically but allowed to opt out.
Of course saving for retirement should be encouraged, but no one needs state government to provide the savings mechanism. Banks and brokerages long have offered IRA-funding mechanisms to employers and employees without charge, with automatic deductions from the paychecks or bank accounts of participants, making retirement saving almost effortless.
MyCTSavings is touted for saving time and money for employers in processing IRA contributions. But the same payroll deduction processing has to be done in MyCTSavings as in an employer’s own retirement savings plan. An employer’s plan costs more only when it offers more benefits than the simple payroll deductions that MyCTSavings will arrange. And to start an IRA no one needs an employer’s retirement savings program any more than anyone needs MyCTSavings. People can do it on their own.
Since it provides nothing people can’t easily arrange for themselves, MyCTSavings resembles state government’s new paid leave program, which is only self-insurance financed by a special half-percent income tax. People could have put that money aside in a savings account all by themselves and used the money for any emergency. Instead state government takes their money and sharply restricts how they can reclaim it. Most won’t be able to.
The idea with both programs seems to be for state government to inject itself into more personal business, hiring more employees in the process, even as government doesn’t manage its own business very well.
Chris Powell is a columnist for the Journal Inquirer in Manchester, Connecticut.
Chris Powell column 