Over the last 40 years , Connecticut has achieved the
dubious distinction of being the worst sinkhole state for financial solvency in
the country, according to the Institute for Accounting, and has a business index
ranking 40 of 50 according to the Tax Foundation. It is a state which cannot
retain and employ the 18-24 year old demographic. In fact, in the past year
alone, the labor force in CT is 51,000 is less than it was one year ago.
As Rep. Cafero pointed out, forty years of unfettered governance by a Democratic majority in both houses of the General Assembly has resulted in a powerful dominance of government sponsored workforce—a government class insulated by the economic pressures affecting the private citizen. In 2011, newly elected Gov. Malloy unveiled his three point plan to tackle the then budget deficit of $3.8 billion:
cut spending, get union concessions, and only raise taxes as a last resort.
Unfortunately, House and Senate Republicans watched Gov Malloy agree to a guarantee of
no union lay-offs for four years, continue union pay raises, expand Connecticut’s government by adding 3 new departments/ offices, and fund all of this through the biggest tax raid in CT’s history-from pet grooming, to facials, to smoothies. Government is now
CT’s largest employer, with 87,761 FTE employees per the Dept of Administrative
Services. The largest employers in CT’s private sector are United Technologies with 26,400 employees and Stop&Shop with 14,000 employees.
Rep Cafero espouses a Lincoln approach to government: Have as
much government as you need, but only the government that you need.
As House Republican Leader, Rep Cafero proposes that there be an elimination of duplicative services, such as the redundant programs aimed to retrain seniors for the workforce. He also espouses a common-sense approach to streamlining bureaucracy to ensure there are the funds needs for infrastructure services such as money to hospitals (which are underfunded in the Gov. Malloy’s proposed budget) and services for the most needy among us.
It was an enlightening morning and we were blessed to have Rep. Cafero for the above discussion.
On August 11, 2012, the GRWF hosted an informal coffee with Republican Congressional candidate Steve Obsitnik. An analysis of the Ernst &Young report comissioned by Congress evaluating the effects of both allowing to expire and maintaining the Bush tax cuts reveals that the middle class is especially negatively impacted by allowing the cuts to expire. The Alternative Minimum Tax is especially egregious for the middle class family which is struggling to cope with policies that have devalued the dollar, making goods and services more costly.
As reported in US News here, the other taxes looming to take effect in early 2013 will be additional onerous burdens on an already stressed middle class.
The Ernst & Young report concludes that allowing the tax cuts to expire would negatively impact the economic recovery, grinding the growth back down to 0.5% from the current 1.5%.
Click here for the Ernst & Young Report. Click here for the article in the Greenwich Post.
The PPACA has been deemed Constitutional, yet it remains bad policy. A close review of this legislation reveals that while it indeed increases coverage, it minimizes care delivery, and funnels all private insurance into one government controlled program.
Enter the era of American Socialized Medicine.
Although there are a number of worthy ideas in the PPACA, the actual structure of it is such that it sets a framework for a new delivery model and allows broad discretion to future appointed (note: no Congressional oversight!) bureaucrats to issue decrees. The IPAB (Independant Patient Advisory Board) is a reallay onerous one. This Board has 15 appointed members, of which only one is a doctor. This Board has the ability to make recommendations to Congress which the PPACA then REQUIRES the Secretary of HHS to implement immediately--NO congressional oversight, NO judicial review. And very hard to repeal.
In fact, to repeal the IPAB,
Congress must enact a Joint Resolution, but it is prohibited from introducing
such a resolution until 2017, and must act no later than Feb. 1 2017. The
resolution must be in place no later than Aug. 15, 2017. In the event that a
resolution is introduced, PPACA calls for a super-majority vote, meaning 3/5 of
all elected members of Congress must support the resolution. Even if a
resolution is passed, the Board would not disband until 2020.
Of all the issues which lead to an erosion of our medical care system, this clearly has the top rating--an agency that by the law which created it, cannot be appropriately overseen by Congress or the Judiciary.
And can this Board ratin health care, despite the language of the lw instructing that no such thing can occur? If one considers that the prupose of the law is to reign in costs, and the law also creates a Board to review and decide what is the appropriate standard of care, then yes! Just think about how the Independent Preventative Services Task Force (authorized in section 4 003) came out in November 2009 with the recommendation that women aged 40-49 do NOT mamograms(they also have stated that men really dont need PSA screening--for prostate cancer--and women dont need cervical cancer screening). And all Congress has to do is blame some Board-they keep their fingers clean.
This is NOT an improvement in healthcare!
Cato Institute--IPAB policy reviewThe Galen InstituteBenjamin Rush SocietyNational Center for Policy AnalysisCouncil for Affordable Health Coverage
III. Impact on Middle Class
IV. Debt Supercycle
V. Social Security & Medicare
1. Revenue is not the problem anywhere. However, the combination of unprecedented fiscal deficits and governmental dysfunction in both the State Assembly, with a Democrat Supermajority, and in Congress, with failure of leadership, has left the taxpayer with an uncertain future.
2. The last Federal budget was passed was FY’08. Congress gets around this with interim appropriations.
The President, by the first Monday in February, submits to Congress a detailed budget request for the coming federal fiscal year, which begins on October 1, outlining spending priorities, recommended taxation, and acceptable defict levels. Congress' budget resolution is supposed to be passed by April 15, but it often takes longer. Occasionally, Congress does not pass a budget resolution. If that happens, the previous year's resolution, which is a multi-year plan, stays in effect.
3. Likewise, CT spending caps are consistently ignored. Put in place in 1992, it is a strict constitutional spending cap, with two components: a balanced budget requirement and restricted growth in spending. The Assembly gets around it by declaring a state of emergency.Gov. Malloy promised to never borrow for operational costs, yet this was done in Spring 2012.
Budget Reporting & Tricks
1. Accounting methods can either shed light or conceal true numbers of receipts and outlays. 'Modified Accrual Accounting' is the usual accounting method used by government agencies. It combines accrual-basis accounting with cash-basis accounting, recognizing revenues when they become available and measurable, and expenditures when liabilities are incurred. Gov. Malloy promised to reform this but instituting Generally Accepted Accounting Methods has been delayed. On May 8, 2012, the CT Assembly approved the same $20.5 billion budget for FY2013 that closes with a projected $200 million deficit.
2. Deficts and Total Debt: How Does the Deficit Affect the Debt? Each year, the deficit is added to the debt.
The Treasury must sell Treasury bonds to raise the money to cover the deficit. This is known as the public
debt, since these bonds are sold to the public.
3. In addition to the public debt, there is the money that the government loans to itself each year. This
money is in the form of Government Account Securities, and it comes from the S.S. Trust Fund.
These loans are not counted as part of the deficit, since they are all within the government.
4. Keeping items off the books: Accrual methods can keep certain accounts off the books, like underfunded
pension funds., and Semi-private entities like Fannie Mae, Freddie Mac, and the Federal Reserve Bank. Certain funds like Social Security, and Medicare operate off the federal books without Congressional oversight.
6. Other budgeting tricks include intra-governmental loans, and leaving securities (basically a government
IOU) in place of funds from another account. The Federal government routinely does this with the
Social Security Trust Fund. The Trust Fund will be totally depleted by 2016.
Impact of State and Federal Governmental Debt on Middle Class
1. There has been a net loss of 40% net worth for the average middle class family from 2007 to 2011.
2. The August 2010 monetization of the Federal debt (accrued due to the Stimulus and Omnibus bills) by
the Federal Reserve Bank pumped a lot of cash into the banks, which devalued our dollar leading to a
decrease of buying power by our dollar.
3. The above also has led to an increase in the Consumer Price Index, meaning that all commodities
including utilities are measuring higher in prices.
4. A large State and Federal Debt consumes significant amounts of tax dollars just to keep the government
afloat and pay off the interest on the debt. This leaves fewer dollars for the private sector to invest in job
1. As debt increases and the economy slows down, the point is reached where the economy cannot possibly
grow enough to cover the increase in the interest payments.
2. There is a point where the Federal debt will exceed the GDP, the total (measured in dollars) of national goods and services. This occurred in August of 2011, when the debt equaled 100% of GDP.
3. The interest on the federal debt is calculated via compound interest, which is when interest is added to
the principal, so that, from that moment on, the interest that has been added also earns interest. This
results in an exponential growth of the debt.
Social Security and Medicare Issues
1. The number of baby boomers entering retirement is growing, and also the number of years that a person
lives is longer, yet there are a lower percentage of workers supporting the people entering retirement than in the past.. These 2 facts indicate that the workforce will be supporting our elderly population for longer amounts of time. With the already plundered Social Security Trust Fund, Congressional Budget Office projects that SS will be depleted by 2016.
TALKING POINTS BOTTOM LINE: SPENDING CUTS MUST OCCUR TO MAINTAIN GOVERNMENTAL SOLVENCY, AND WITH THE ECONOMIC SLOW DOWN, WE MAY NEED TO RAISE TAXES FOR A TIME TO COVER OPERATING COSTS