Unions Not Happy About Proposed Cuts

To no one’s surprise, state employee unions are responding negatively to proposed cuts in the state budget, including a chunk to be taken out of pension funds.

The coalition representing state unions notified Rell late Wednesday it would meet to discuss her request for a $14.5 million concession involving a state retiree health care savings account.

But West Hartford lawyer Daniel Livingston, chief negotiator for the State Employees Bargaining Agent Coalition, also made it clear that labor believes Rell has struck the wrong tone with her pledge to eliminate the deficit with massive cuts.

“Wholesale cutting of public spending at this time, when consumer and corporate spending is falling, would not only deny the public the services it needs, but lead to a downward spiral devastating both Connecticut’s economy and the state budget,” Livingston said. (Phaneuf)

Rell has said that raising taxes is out of the question. The unions seem to be hoping that the Obama administration will craft some sort of aid package for states. Where the money for that is going to come from I can’t imagine–especially seeing as a maker of mediocre, unpopular cars seems to be first in line for government handouts at the moment.

The heart of the matter is the $14.5 million from the savings account for retiree health care. The money can’t be removed without union and legislative approval. Right now, it looks like the unions may not let this happen. However, it’s worth pointing out that benefits themselves can’t be removed, only the money from the savings account–which may make things tougher in the future. The unions also don’t like the tone Rell has struck–namely, that massive cuts are the only way out.

Democrats in the legislature, on the other hand, seem to be on board with spending cuts, at least so far. Here’s what Senate president Donald Williams had to say today:

Senate President Donald E. Williams, Jr. says great progress is being made in negotiations between legislative leaders and Governor Rell’s office on a plan to greatly reduce the current fiscal year’s budget deficit. Senator Williams says that while some details of the budget reduction plan are still being ironed-out, all sides are working together in a bi-partisan manner.

Unlike the federal government, the state government can’t deficit-spend. So the choice here is very stark–we either raise taxes or cut services. Rell wants to cut services. Which services will see cuts has yet to be determined, of course, but Monday’s special session will give us a better idea of where the state is heading over the next few years.

Source
Phaneuf, Keith. “Unions say they don’t like Gov. Rell’s tone.” Journal-Inquirer 20 November, 2008.

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63 responses to “Unions Not Happy About Proposed Cuts

  1. >>….especially seeing as a maker of mediocre, unpopular cars seems to be first in line for government handouts at the moment….

    Long ago, probably before you were even born Gabe; I would have absolutely agreed with you.

    However, after around 3 decades earning a living selling cars, software to car dealers, commercial leasing, or managing the lease arm of a multipoint mega-dealer, I feel quite familar with automotive product and have watched as our domestics have gone from crap, to stuff I’d drive.
    (There were a lot of years I wouldn’t have been caught dead in a domestic.)

    I know from whence I speak.

    From:
    BY MARK PHELAN • FREE PRESS COLUMNIST • November 17, 2008

    The creaky, leaky vehicles of the 1980s and ’90s are long gone. Consumer Reports recently found that “Ford’s reliability is now on par with good Japanese automakers.” The independent J.D. Power Initial Quality Study scored Buick, Cadillac, Chevrolet, Ford, GMC, Mercury, Pontiac and Lincoln brands’ overall quality as high or higher than that of Acura, Audi, BMW, Honda, Nissan, Scion, Volkswagen and Volvo.
    Power rated the Chevrolet Malibu the highest-quality midsize sedan.
    Both the Malibu and Ford Fusion scored better than the Honda Accord and Toyota Camry.

  2. DARN!!!

    Link didn’t work.

    Try this:

    6 myths about the Detroit 3

  3. What tone should governor’s use when asking unions to make concessions – groveling? The objection is not to the tone. The union does not want to make salary and benefit concessions. The 14$ million that the governor wants to “remove” from a state pension savings account will not affect future payouts; therefore, it is not a “cut” of any kind. Reporters ought to be careful with the language they use to describe what is about to happen. The “removal” is an appropriation that, unrelated, may violate active contracts. What the state – the governor, incoming Speaker of the House Christopher Donovan and Senate Pro Tem Donald Williams must do is – either renegotiate active contracts or cut (using the word in its correct sense) future benefits and salaries in future contract negotiations. Dovovan, rumored to be giving up a union position to avoid possible conflicts of interests, no doubt will be of service in negotiating concessions from unions. Right?

  4. [quote]“Wholesale cutting of public spending at this time, when consumer and corporate spending is falling, would not only deny the public the services it needs, but lead to a downward spiral devastating both Connecticut’s economy and the state budget,” Livingston said.[/quote]

    Can anyone — including Dan Livingston — explain how cutting the budget would “lead to a downward spiral devastating Connecticut’s economy and the state budget”?

    I hope Rell beats this clown senseless like Rowland did in 2003.

  5. [quote comment=”38642″][quote]

    I hope Rell beats this clown senseless like Rowland did in 2003.[/quote]

    You mean this guy?

  6. It’s time to reassess Public Financing of State employee Retirement Benefits. I know a deal is a deal, but why is it fair to have to raise the taxes of 3.4 million residents to keep up with an ever increasing pension fund liability of a few? Maybe it’s time to phase out these perks and let them join social security and fund their own accounts?

  7. [quote comment=”38644″]Maybe it’s time to phase out these perks and let them join social security and fund their own accounts?[/quote]

    Or, at least bring the pension plans back down to Earth. Compare a state or municipal worker’s retirement to that of a military veteran, versus the job hazards associated with each. Veterans dodge bullets and leave their family, while state workers work 9-5 (sometimes). It’s disgusting.

  8. ACR,

    ” The independent J.D. Power Initial Quality Study scored Buick, Cadillac, Chevrolet, Ford, GMC, Mercury, Pontiac and Lincoln brands’ overall quality as high or higher than that of Acura, Audi, BMW, Honda, Nissan, Scion, Volkswagen and Volvo.

    I have no reason to question your comment but would add a few comments of my own.

    For me quality (and cost) are very important, but so are other things. Like when I get into the car do I like what I see? Or when I actually drive the car do I feel connected to it and the road etc? These are just two examples out of many I could site where I think the big three largely come up short against the competition you mention.

    To me it is not so much a question of can American car manufactures build a quality product? It’s more a question of really why do so many Americans prefer to buy foreign cars in the first place? Sure it used to be quality, but obviously now it’s something else.

    I still say the big three simply does not understand our markets as well as the foreign competition does.

    Frankly when three CEO’s, of three failing companies, themselves fail to understand the pure stupidity of flying their costly private jets to Washington to beg for billions in bail out money, I see no way we can hope they could understand the market they are in.

    In another post about a week ago I suggested to AS, who seems hung up that Gov. Rell never finished college, that no amount of college provides any assurance of any common sense. I think these three fools just proved me correct.

  9. [quote comment=”38645″][quote comment=”38644″]Maybe it’s time to phase out these perks and let them join social security and fund their own accounts?[/quote]

    Or, at least bring the pension plans back down to Earth. Compare a state or municipal worker’s retirement to that of a military veteran, versus the job hazards associated with each. Veterans dodge bullets and leave their family, while state workers work 9-5 (sometimes). It’s disgusting.[/quote]

    I agree. Secretaries and maintenance workers should be made poorer for the good of everyone else. The way I see it, there ought to be hedge fund managers as the rich people, “the troops” as the middle class, and everyone else can fuck off.

    I also think that anyone picking up an unemployment check should be forced to take a swig of rancid milk. Life is not shitty enough for unemployed people, either.

  10. [quote comment=”38641″]The “removal” is an appropriation that, unrelated, may violate active contracts. [/quote]

    It’s good to see a conservative with some respect for labor contracts.

  11. To me it is not so much a question of can American car manufactures build a quality product? It’s more a question of really why do so many Americans prefer to buy foreign cars in the first place? Sure it used to be quality, but obviously now it’s something else.

    GM still sells a lot of cars, actually. Worldwide last year, they sold more than Toyota by a very small margin.

    GM’s problem is that it cannot make the cars as cheaply as its competitors can. GM has higher labor costs. The foreign auto manufacturers are located primarily in the southern and western states with right-to-work laws, so the unions are not as powerful. Unions extract somewhat higher wages, but the major problem they bring is the work rules and the inability for companies to fire people.

    GM really sowed the seeds of destruction decades ago with the long term promises it made to the unions. Those managers that made those agreements have long since retired. The only real solution seems to be to force GM into Chapter 11 bankruptcy. This doesn’t mean the end of GM, but it does mean the end of its contracts that it could not otherwise exit. Giving GM and the other car makers $25 billion only is going to delay the problem by a few months unless GM can get out of its union contracts.

  12. gmr,

    “The only real solution seems to be to force GM into Chapter 11 bankruptcy. This doesn’t mean the end of GM, but it does mean the end of its contracts that it could not otherwise exit. Giving GM and the other car makers $25 billion only is going to delay the problem by a few months unless GM can get out of its union contracts.”

    Of course what you say there is 100% correct.

    I however do not believe the problem is just cost. I more believe it is understanding the market. Naturally it is possible their cost structure may force them to build more land boats where they can make money and less sporty and fuel efficient cars with slim profit margins that might appeal to the younger first time buyer.

    Look at it this way.. You are a kid maybe 18 to 20 years old and you are about to buy your first new car. These are the very people you will want to attract and keep as lifetime customers to build your business on. These guys certainly are not for the most part buying the land boats. They also don’t die off as fast as the older guys who want that boulevard ride. It is this very part of the market that for one reason or another the big three let become customers of the foreign competition and buy time they could afford a land boat were buying BMW’s and Lexus.

    We can blame the UAW all we want, and certainly their greed makes them deserve to go down with the ship, but in the end it was very short sighted management that gave them the ship to sink in the first place.

    But no matter if we agree or do not on the actually cause of the problem we do agree that the only real solution is Chapter 11. I then hope what is left of the big three learns not to give the ship away again and learns what it takes to give American buyers what they really want.

    Honestly after the corperate jets to plead poverty caper, I am less than hopeful that they are able to learn much of anything that way.

  13. matt w,

    “I agree. Secretaries and maintenance workers should be made poorer for the good of everyone else.”

    I don’t disagree with you in that current state worker contracts must be honored, but I do suggest that we are not going to close a $6 billion dollar gap without a lot of blood letting from us all. Some, (not all) of that blood letting must come from those contracts, which must be reopened and their costs reduced drastically.

    Does it make sense to force the struggling banker, factory worker,or single parent trying to make ends meet, to be made even poorer for the sake of the state workers who’s compensation, benefits and pensions far exceed what the private sector typically can afford for similar work?

    Try to keep that in mind when the state worker with the $5 co pay waves his/her union contract in the eyes of the struggling private sector worker who’s taxes pay for those benefits yet who probably does not even have a pension for themselves, and isn’t even sure they will have a job come Monday morning.

  14. For starters – I have never sought to be any sort of apologist for the American car industry.

    That said, fair is fair, and both they and the UAW are getting tarred like crazy with a load of half-truths, lies, and misconceptions.

    Did you take this link by the way?
    http://www.freep.com/apps/pbcs.dll/article?AID=2008811170379#

    [quote comment=”38648″]

    It’s more a question of really why do so many Americans prefer to buy foreign cars

    [/quote]

    Human nature.
    Brand loyalty & habit – same reason my dad went through 21 Fords in a row; his father drove Oaklands until they changed the name to Pontiac and neither man ever owned anything else.

    My liberal brother-in-law has had at least 10 Toyotas back to back. The 1st one gave him good service so he never even bothered seriously looking at anything else.
    Unless someone is really interested, a “car person” so to speak; they tend to stick with what’s worked for them.

    There’s a large group of Americans that have never given domestic cars a second thought. Their parents drove Accords and/or Camrys and that seems normal to them.
    Those parents (people my age) started buying imports because they got more value for their money; and it was true.

    We built some real crap here for a while and that was exacerbated by
    UAW workers that sabotaged in lieu of going on strike.
    I’ve seen a Pepsi bottle built *into* a car (between the inner and outer fender) with a note inside (“how long did it take you to find this you *^%*##”)).

    Meanwhile; Japan Inc’s. car industry began to grow so they built brand new factories and filled them with newer (often American built) production machinery. It wasn’t long before they had a real leg up on our domestics.

    Detroit took it’s time addressing some pretty basic issues; and still has the problem of some older sub-standard franchisees that refuse to offer top shelf service and are impossible to get rid of.

    However; from more or less the mid-80’s “Taurus era” (which we can now see was a watershed event); to now the big 3 have addressed everything under the sun.

    Overall quality has gone through the roof and that’s according to *every* respected source.

    Victims of their own success
    Improved quality has had a cost to the manufacturer due to a retardation in turns.
    From the mid-80’s forward the average ownership period of a new vehicle by it’s 1st owner has grown by more than year despite the fact that new cars cost less in real dollars (man hours of work to earn the purchase price).

    UAW has made MAJOR concessions already
    Further they & the UAW have come to terms as to a long term solution (which is why the UAW isn’t interested in anymore concessions; starting pay for new hires is now 14 bucks an hour and no pension at all.)

    No one could possibly have expected medical coverage to raise in the fashion it has over the past decade or so; and that expense alone caught all 3 of the “big 3” off guard.

    Have you driven a Ford Lately?
    Think what you like; but if you actually think a Camry is more fun to drive than a Fusion I’d say you haven’t driven the Fusion.

    The press is doing a poor job reporting too.
    The ethics of one of the companies involved isn’t what you might expect.

    Last year Toyota recalled more vehicles than they built; and they lost a class action suit regarding 8.6 million engines that had *failed* while the vehicles were under warranty in most cases.

    Right now Toyota is in the middle of buying back 2001 Tundra’s due to the severe rust problem which renders the unit unfit for the road.

    They’ve done a masterful job keeping all of the above quiet haven’t they?

    European car quality has slipped like bald tires on ice!
    The fabulous Eurocars from manufacturers I used to strongly favor are now suffering the problems English cars did 40 years ago. Bad electrical systems.

    They’re f***ing haunted as if by Lucas!
    (Bosch bought Lucas and must have wound up with the curse that went with it.)

    Both Mercedes & BMW have and continue to produce cars with weird wiring issues, bad enough that I know several former multi-Mercedes (ie: 7 – 10 in a row over 20 years) owners that are now driving Cadillacs.

    In many parts of Europe both Ford & Opel/Vauxhall (GM) outsell everything else. (OHIO made wiring harnesses are just one reason)

    Seeing as Caddy is now producing the fastest production sedan in history (not their history…in history) smarter former BMW owners are now opting for it. (0-60 under 4 secs. in a 4 door sedan???)

  15. When did a State Job become a right , Matt W?

  16. Matt W,
    I believe a deal is deal. But for example, someone decided not to fund the Teacher’s Pension fund appropriately, and up until last year or the year before, that fund was 2 billion in arears. Rell made a deal to put 250 million a year for period of so many years in order to catch up. My question is, who made the decision not to fund this, and where did the money go instead? And why do my taxes have to go up for this? And why aren’t any heads rolling? Rolands cottage deal looked petty compared to this and he went to jail.

  17. Al,
    How about the unfair trade practices of our Foreign competit0rs, and the tarrifs and import tasxes imposed on American products in their markets?
    I just read where 700,000 Korean cars came into the US last year vs. 5,000 going there. There are too many Goverment agencies regulating too much of our ecomony in almost every aspect and in every market. Everything can’t be blamed on the Car companies.

  18. Al,
    How does any company function in the US, when there are 15 Cabinet Departments, nine of which control many aspects of the U.S. economy. They are the Departments of: Transportation, Housing and Urban Development, Health and Human Services, Education, Energy, Labor, Agriculture, Commerce and Interior. On top of that, there is the ABC’s
    of federal agencies like IRS, the FRB and FDIC, the EPA, FDA, SEC, CFTC, NLRB, FTC, FCC, FERC, FEMA, FAA, CAA, INS, OHSA, CPSC, NHTSA, EEOC, BATF, DEA, NIH and NASA.

    How many of these agencies figure into the cost of US Automobiles?
    and can you expect Germany, China, Korea, Japan, etc.. to abide by these regulatory agencies?

  19. >>There are too many Goverment agencies regulating too much of our ecomony in almost every aspect and in every market. Everything can’t be blamed on the Car companies

    Yes!

    Our FTC refuses to allow our companies to do even federal mandated R&D via joint venture; which of course is exactly how their competitors keep such (MASSIVE) expenses under control.

    Japan BTW is far worse than Korea as it regards blocking our produce & products.

  20. [quote post=”2365″]Don Pesci said:

    The “removal” is an appropriation that, unrelated, may violate active contracts.

    It’s good to see a conservative with some respect for labor contracts.[/quote]

    Matt,

    Sure, I don’t believe in ex post facto laws or regulations. The only way the state can void prior contracts is by reneging on them, and none of us would wish to live in that kind of a state. But, just to clarify: The state can ameliorate conditions by renegotiating contracts at any time. And this ought to be done as soon asd possible. If the unions want to preserve present contractual ceilings, they must not complain when the roof falls down on them. And it will fall, sure as shooting.

  21. [quote comment=”38676″]Matt W,
    I believe a deal is deal. But for example, someone decided not to fund the Teacher’s Pension fund appropriately, and up until last year or the year before, that fund was 2 billion in arears. Rell made a deal to put 250 million a year for period of so many years in order to catch up. My question is, who made the decision not to fund this, and where did the money go instead? And why do my taxes have to go up for this? And why aren’t any heads rolling? Rolands cottage deal looked petty compared to this and he went to jail.[/quote]
    The Fund was not $2 billion in arrears. As of June ’06 it was $7 billion underfunded. The $2 billion was borrowed (bonded) on behalf of the taxpayers which in my mind didn’t kick the can down the road one inch from the taxpayers” stanpoint. At the end of the day, they still owed the fund the $7 Billion, just $2 Billion was bonded debt @ about 6%/year. (The bonds were issued Spring of ’08 and invested in the fund. Wonder how that deal is working out? )

  22. ACR,

    “My liberal brother-in-law has had at least 10 Toyotas back to back. The 1st one gave him good service so he never even bothered seriously looking at anything else.
    Unless someone is really interested, a “car person” so to speak; they tend to stick with what’s worked for them.”

    Exactly that is my point……….. The big three gave far too many of us reasons to buy foreign back in the 70’s and we did. When we did too many of us had our eyes opened.

    I worked all my business life in the consumer products business.

    Rule number 1……… Know your market(s).

    Rule number 2……… Produce only high quality, cost effective products that serves your customers well in those markets.

    Rule number 3……… Do all you can to give your customers no reason at all to try the competition. In other words make sure your product and services meet or exceed their expectations.

    I’d say the US auto industry came up short on all three…………… Certainly in all fairness they had other issues as you point out but honestly can you really say the big three didn’t shoot themselves in the foot with those three rules? Now that the horse is long out of the barn how do we get it back in?

  23. Bluecoat, you ask,

    How many of these agencies figure into the cost of US Automobiles?
    and can you expect Germany, China, Korea, Japan, etc.. to abide by these regulatory agencies?

    Don’t some of these countries manufacture and sell here in the US? Would they not be subject to the same issues then?

  24. [quote comment=”38687″][quote post=”2365″]Don Pesci said:

    The “removal” is an appropriation that, unrelated, may violate active contracts.

    It’s good to see a conservative with some respect for labor contracts.[/quote]

    Matt,

    Sure, I don’t believe in ex post facto laws or regulations. The only way the state can void prior contracts is by reneging on them, and none of us would wish to live in that kind of a state. But, just to clarify: The state can ameliorate conditions by renegotiating contracts at any time. And this ought to be done as soon asd possible. If the unions want to preserve present contractual ceilings, they must not complain when the roof falls down on them. And it will fall, sure as shooting.[/quote]
    In an ideal world I agree. The problem is that, unlike the private sector where bankruptcy or insolvency is not in the interest of either party, the State Employee unions have no incentive to renegotiate. Other than massive job cuts, the only leverage the state has is the threat to reneg (which I believe the legislature can do). Given the current make up of the legislature, and the influence of the unions, I don’t see this happening.
    To put this in context, the taxpayers are currently on the hook to the state employees in an amount north of $30 Billion ($8 Billion in pensions and $22 Billion in Retirement Health Care as of June’06). Their contract lasts until the year 2017 guaranteeing these benefits. In my view, this is simply not sustainable. Continuing tax increases will be required, and those that can (being the same ones who are expected to pay the taxes) will leave (including many state retirees who won’t want to foot the bill either).
    As noted above, I don’t see the legislature facing up to this anytime soon, particularly with the budget situation being what it is, and they will leave it to future legislators to deal with.
    If you can, make your moving plans now, because the iceberg is straight ahead and nobody on the bridge is paying attention.

  25. JM

    You want to check on that one. The state cannot violate a contract, but it can call for re-negotiation. I agree with you that it is not likely the unions would wish to re-negotiate contracts so favorable to them. But “not likely” doesn’t cut it in perilous times like these. The state should ask for re-negotiations, and legislators should line up in favor or against. I’m not sure it’s likely that legislators would not wish to re-negotiate. If they were to favor re-negotiation, we have a new ball game. If unions prevail over them, then we will know for certain who is running the state. Nothing ventured, nothing gained.

  26. [quote post=”2365″]Rule number 1……… Know your market(s).

    Rule number 2……… Produce only high quality, cost effective products that serves your customers well in those markets.[/quote]
    And what do you do when the political class forces you to do otherwise?

  27. Al said:

    “The big three gave far too many of us reasons to buy foreign back in the 70’s and we did. When we did too many of us had our eyes opened.

    No argument; in `73 – `74 I “graduated” from peddling Pontiacs to selling Subarus when the owner picked up that franchise.

    By May the dealership was the #1 Subaru dealer in the US and I was delivering in excess of 50 new cars a month with regularity. (That’s a lot of new iron and I never approached numbers like that again.)

    I loved the fact that I could call an existing customer and get a referral. Often customers showed up on their own with a friend or relative in tow.
    The silly things began selling themselves.

    Had I not spent decades in the business I too would be unaware of the dramatic metamorphoses Detroit has undergone.

    Indeed – other “car guys” over 50 often remark that we never would’ve guessed we’d see a day any of us preferred domestic product as “drivers” (the unit a dealer actually uses as opposed to inventory) much-less as the favored products to sell friends and relatives.
    (No one wants any trouble from people they associate with regularly)

    Every car wholesaler, retailer, (franchised or independent (used)) over 50 that I know would have bet against what we now see.

    If you think about it, used car people are in a better position to judge who is building a durable vehicle than any other group.

    Many (probably not most) smaller used car dealers prosper on the basis of a strong reputation.

    Aside from niche independent dealers that specialize in some specific import; NO dealer I know sells Toyotas or Hondas with any enthusiasm due to their excessively high (2 – 3 times domestics) parts costs.
    They do all keep an Accord or Camry on their front lines as “bait”; but try to sell something else for usually half the price – and a LOT easier to keep the customer happy in.
    (I still have a lot of used car dealer clients using a software package I wrote and marketed over a decade ago.)

    The big 3 need to pick up a few market share points and they’ll be fine in the long run.

    Thus simply tossing cash at the big 3 won’t work in the long run.

    The consumer needs to be motivated to even try their product; which is why a plan something along the lines I outline here: Another Stimulus Package?

  28. [quote comment=”38693″]

    Don’t some of these countries manufacture and sell here in the US? Would they not be subject to the same issues then?[/quote]

    NOT as it regards FTC; they simply join forces elsewhere and do their joint R&D there saving themselves BILLIONS.

    Further; they have come over here and built spanking new plants which are far easier to keep in OSHA compliance.

    Detroit inc could have moved all of their production offshore and right now I suspect they wish they had.

  29. gerardw, you ask:

    And what do you do when the political class forces you to do otherwise?

    Ironically I submit to you that had the big there fully embraced the CAFE stds they would be perfectly positioned to take advantage of today’s market.

    As far as I know we are out of dinosaurs and other prehistoric life forms to make petroleum out of. Also as far as I know a very significant percentage of what we know still exists, exists in places that are not losing sleep at night worrying about the big three. Bottom line there are more and more people on this planet competing for a resource that is in limited supply. What was the financial plan of the the big three and the UAW here. Just to make gas guzzlers until the oil went dry?

    This reminds me of a scene in one of my all time favorite movies, the 1960 movie The Time Machine, based on the book by H G Wells…

    In that movie the star Rod Taylor travels 800,000 years into the future and finds the human race divided into two groups. Those living above ground, and those living below. The ones living above ground seemed to have it all. No work, all play, and plenty to eat when ever they wanted it. Sort of reminds you of the UAW does it not :-)? The only problem was each day there were less and less of them because those living below ground were eating for supper those living above ground.

    When Taylor asked one of the clue less guys living above ground where all the food they ate came from he answered, “from the trees”. When Taylor then asked who grew it the answer was “no one, it always grows”. I guess H.G. Wells was suggesting the danger with large segments of humanity blindly thinking that money grows on trees, or more probably nothing is free without conditions.

    I don’t often have many good things to say about government standards but to me this one example where they got it right. It appears that the big three just felt the oil and therefore the money would always grow if not under ground, now on the trees of Congress.

  30. [quote comment=”38687″][quote post=”2365″]Don Pesci said:

    The “removal” is an appropriation that, unrelated, may violate active contracts.

    It’s good to see a conservative with some respect for labor contracts.[/quote]

    Matt,

    Sure, I don’t believe in ex post facto laws or regulations. The only way the state can void prior contracts is by reneging on them, and none of us would wish to live in that kind of a state. But, just to clarify: The state can ameliorate conditions by renegotiating contracts at any time. And this ought to be done as soon asd possible. If the unions want to preserve present contractual ceilings, they must not complain when the roof falls down on them. And it will fall, sure as shooting.[/quote]

    Right, I understand that you favor lowering their long term compensation, I just wanted to recognize that it’s refreshing to watch one of these debates play out without the conservative line being “BREAK THE UNIONS.” That’s the mirror image of progressives asking over and over for recall so we could get rid of Lieberman mid-term. It drives me crazy — there are rules to the system.

  31. There seems to be this ongoing perception that no one buys GM cars. That’d actually be an easier problem to solve: change the product mix, change the marketing, get the product moving and then GM’s problems would go away.

    However, GM sold 9.369 million cars and light trucks worldwide last year; Toyota sold 9.366 million. So it’s not a question of making smaller cars that consumers supposedly want more.

    Ironically I submit to you that had the big there fully embraced the CAFE stds they would be perfectly positioned to take advantage of today’s market.

    Gasoline is under $2 per gallon. The problem affecting all automotive manufacturers is a lack of credit available, and a souring economy.

    GM has problems because of its current labor costs and its legacy costs. It has to pay a huge amount each and every year for retired workers. These workers don’t produce cars any more. So GM has to overcome a massive amount of fixed costs. The current union contracts are also very onerous. The only way you can get out of contracts like this is to go into bankruptcy. GM needs to go into Chapter 11. Chapter 11 means reorganization. Giving GM bailout money before they hit chapter 11 is just delaying the inevitable.

  32. [quote post=”2365″]Ironically I submit to you that had the big there fully embraced the CAFE stds[/quote]
    Ain’t buying it. The effect of CAFE was to shift manufacturing to those vehicles people wanted to buy and they could make money selling: large “trucks” exempt from CAFE.

    Had Congress really wanted to reduce oil demand, there was a simple, market based approach: tax gasoline to a minimum price per gallon to shift consumer demand to more fuel efficient vehicles.

  33. gmr,

    from your post 30 siting my comment:

    I submit to you that had the big there fully embraced the CAFE stds they would be perfectly positioned to take advantage of today’s market.

    To that you say:

    “Gasoline is under $2 per gallon. The problem affecting all automotive manufacturers is a lack of credit available, and a souring economy.”

    So let me now ask for how long now has GM been losing money?? Also why is gasoline currently under $2.00/gal? Can we agree it’s lack of demand for crude oil? ……..Lack of demand caused by an economy that is dead in the water, and people who have changed their driving habits. They may have short memories, but not short enough to have yet forgotten gas at $4.00/gal just two months ago……….

    Sure it’s nice to see Gas under $2.00/gal but I would rather see my investments worth what they were 2 months ago. Let’s not make the same mistake Detroit makes and think $2.00/gal gas is here to stay for very long. Here’s a hint. Enjoy it, but don’t get used to it. Frankly if it stays at this price we are in far deeper crap then any of us wish to think of.

    You also say:

    “GM has problems because of its current labor costs and its legacy costs. It has to pay a huge amount each and every year for retired workers. These workers don’t produce cars any more. So GM has to overcome a massive amount of fixed costs. The current union contracts are also very onerous. The only way you can get out of contracts like this is to go into bankruptcy. GM needs to go into Chapter 11. Chapter 11 means reorganization. Giving GM bailout money before they hit chapter 11 is just delaying the inevitable.

    Let me be clear here. I totally agree with every word you wrote there.

    I am just a retired engineer who spent an entire career managing an international business. You point out that GM still sells slightly more cars than Toyota. The last I knew you are correct. I am merely pointing out that the game is not just that simple. You also need to sell those cars at a profit, not a loss.

    You do that with a combination of many things some are, volume, product quality, attractiveness, correct market segmentation, and of course a cost/price structure that allows for a profit. Anyone can sell anything at a loss, the key is to be able to sell at a profit.

    Certainly as you point out the big three let their labor and legacy costs get out of control, just like we have here in Hartford with our budgets and the state workers union contracts. Just as bad are the union work rules etc. But to place all the blame on the unions is very short sited. Unions don’t write bad contracts by themselves, they need management’s help. That is why bit is called collective bargining.

    So let’s blow up the union contracts by forcing the big three to go chapter 11, but what evidence do we see that Detroit (or Hartford) has learned anything from their past mistakes, and won’t repeat them?

    It friggin would not surprise me to learn the reason the three CEO’s flew to Washington in their private jets, instead of flying commercial, to beg for money this week was because their UAW contracts forced them to fly themselves there using a UAW pilot…….

  34. gerardw,

    “Had Congress really wanted to reduce oil demand, there was a simple, market based approach: tax gasoline to a minimum price per gallon to shift consumer demand to more fuel efficient vehicles.”

    Do you think there are many politicians in Congress who would vote to support that idea? Not that it isn’t a decent idea. I would love to see the incoming Congress do exactly as you say. I would love nothing more than to see the entire Connecticut Congressional delegation not just introduce your idea, but very publicly work to get it passed. What do you think it would take here an additional federal tax of let’s say $1.00/ gal?

    You do realize this would be a regressive tax, so maybe we would need to add gas to the list of products we place sin taxes on.

    However there would be lots of winners. The people who are concerned about green house gasses, and global warming, would throw a wild party. The big three would be able to clearly now see the market they need to serve. The lack of demand for gas would cause the price of crude oil to plummet even more, and we could once again turn the heat in the house up above 62 degrees.

    Most of al I get my most cherished wish all…… Term limits for the Connecticut Congressional delegation.

    Now does all that sound too good to be true?? Yah sadly to me at least it does, which is probably why we would never see it happen.

    I suggest for now at least these first steps. Chapter 11, a study in marketing 101, and maybe a focus group with the three CEO’s and some grade school kids who ran a road side lemonaid stand this past summer on how to turn a profit.

  35. >>You also need to sell those cars at a profit, not a loss.

    They do..in a fashion.

    If they sell one car they lose billions, two and it’s half of that, so forth until they hit a tipping point of sorts and then the cash rolls in by the …..pickup truck load!

    That’s why we’ve heard both; “Ford lost XX billion in a quarter” or “Ford made a record of X billion in a single quarter”

    It’s all numbers – the numbers are down; under 9 million units doesn’t cut it; 14 million is a banner year.

  36. Matt said:

    “I just wanted to recognize that it’s refreshing to watch one of these debates play out without the conservative line being “BREAK THE UNIONS.”

    That’s the problem in a nutshell.

    Too many on my side of the aisle find union bashing too addictive to give it up .
    It is an enjoyable pastime, one of my favorites in fact!
    I’ve never passed a picket line that I didn’t have an urge to cross, and often have…just to piss them off.

    Currently however, it ignores too many facts regarding UAW concessions that have already been made and are either in place or will be over the next 14 months or so.

    The UAW’s behavior as it regards the big 3 has been remarkably laudable and I can’t believe I’m even typing that…..but it’s true.

    While some on the left fail to see that bailing out the big 3 solves nothing; they need to sell iron in numbers to get employment levels up.

    (Including here in CT by the way, where we make all sorts of small components that wind up in some other larger gizmoe which attaches to something important so the car can go zoom)

    Republicans that simply “don’t get it” should give it up; the Dems won and will control everything in a couple of months anyway.

    We can *maybe* impliment a better long term fix now or wait and the Dems will probably spend too much and not realize the job or tax revenue gains that they think they will because they’ll do it wrong.
    (Democrats always do it wrong – it’s a given.)

    Further – neither side is considering just who we count on for things like TANKS and a boatload of other military vehicles.

  37. [quote post=”2365″]Right, I understand that you favor lowering their long term compensation, I just wanted to recognize that it’s refreshing to watch one of these debates play out without the conservative line being “BREAK THE UNIONS.” That’s the mirror image of progressives asking over and over for recall so we could get rid of Lieberman mid-term. It drives me crazy — there are rules to the system.[/quote]

    Matt,

    Right. I would like unions a lot more if they did more than agitate for increased pay and benefits. In the (very) early days, unions provided their workers with more than that. So – just a suggestion – why don’t unions get involved in providing their workers with, say, medical benefits, low cost housing, free on the job educational benefits, etc? I’m sure you could think of some other things. If unions diversified, they would not be on the way out, and – as an added bonus – there would be more union shops. Time to upgrade the dinosaur. But I’m sounding like a union stewart…

  38. [quote comment=”38671″]matt w, […]

    I don’t disagree with you in that current state worker contracts must be honored, but I do suggest that we are not going to close a $6 billion dollar gap without a lot of blood letting from us all. Some, (not all) of that blood letting must come from those contracts, which must be reopened and their costs reduced drastically.[/quote]

    If we’re talking about a mix of reduced benefits for state employees, some kind of hurt for the electeds (decreased pensions? hourly pay rates?), increased taxes for those with many millions/billions in assets and income, and making some new fees (congestion pricing, a carbon tax, etc), then everyone will share in the hurt and will probably not feel screwed by the concessions.

    But if we’re looking at a four-month GOP filibuster at any effort to increase any kinds of taxes — which seems, to me, very likely — then you know what? If I represented the only group in these discussions with a legally enforceable contract to an economic safety net, I wouldn’t be in the mood to bargain over it either.

    You’re right that everyone has to give a little, and these workers will give regardless (if they’re as generously compensated as they’re made out to be, then a more steeply progressive income tax will surely cause them to return more of their paycheck to the state even without other concessions). But I don’t think the ball’s in the unions’ court — the structural changes are the big challenge here, and those are the ones that have been most fiercely resisted over the years.

    Check out this OIB comment to see how at least those public employees unions are keeping cost increases in check, while the non-union branches are seeing costs explode.

    Put yourself in their shoes — and ask if you wouldn’t have more than a little bit of hostility to givebacks in an environment when the estate tax is being slashed and the financial services industry is getting billions in bailout dollars (many of which ultimately landed in Connecticut).

  39. [quote post=”2365″]grade school kids who ran a road side lemonaid stand[/quote]
    Sure hope those kids had an acceptable KASC (Kid Average Sugar Content) in that lemonade.

  40. [quote comment=”38709″]If unions diversified, they would not be on the way out, and – as an added bonus – there would be more union shops. Time to upgrade the dinosaur. But I’m sounding like a union stewart…[/quote]

    That’s actually, in broad terms, the philosophy of the Working Families Party — that they have to think much less parochially about the specific interests of a set of specific laborers, and do organizing work outside of their comfort zone that will produce economic benefits for a broader swath of society.

    Change to Win (six or seven unions that split from the AFL-CIO a couple years ago) is in a similar place with their thinking.

  41. [quote comment=”38711″][quote comment=”38671″]matt w, […]

    I don’t disagree with you in that current state worker contracts must be honored, but I do suggest that we are not going to close a $6 billion dollar gap without a lot of blood letting from us all. Some, (not all) of that blood letting must come from those contracts, which must be reopened and their costs reduced drastically.[/quote]

    If we’re talking about a mix of reduced benefits for state employees, some kind of hurt for the electeds (decreased pensions? hourly pay rates?), increased taxes for those with many millions/billions in assets and income, and making some new fees (congestion pricing, a carbon tax, etc), then everyone will share in the hurt and will probably not feel screwed by the concessions.

    But if we’re looking at a four-month GOP filibuster at any effort to increase any kinds of taxes — which seems, to me, very likely — then you know what? If I represented the only group in these discussions with a legally enforceable contract to an economic safety net, I wouldn’t be in the mood to bargain over it either.

    You’re right that everyone has to give a little, and these workers will give regardless (if they’re as generously compensated as they’re made out to be, then a more steeply progressive income tax will surely cause them to return more of their paycheck to the state even without other concessions). But I don’t think the ball’s in the unions’ court — the structural changes are the big challenge here, and those are the ones that have been most fiercely resisted over the years.

    Check out this OIB comment to see how at least those public employees unions are keeping cost increases in check, while the non-union branches are seeing costs explode.

    Put yourself in their shoes — and ask if you wouldn’t have more than a little bit of hostility to givebacks in an environment when the estate tax is being slashed and the financial services industry is getting billions in bailout dollars (many of which ultimately landed in Connecticut).[/quote]

    Matt:

    No one is guaranteed a job simply because they are employed by the State. If we can’t afford a State worker, he or she should lose their jobs, period. Raising the income tax, or “un-slashing” a ridiculously unfair estate tax that desperately needs to be slashed, does not make the State better off. Remember, no state has implemented an income tax since we did in 1991, for a very, very good reason: it’s bad for growth.

    In 2003, Dan Livingston tried to play chicken with John Rowland and lost. He stuck to his guns and refused to renegotiate, and Rowland laid off 3,000 State workers, and they were hardly missed. For example, that same year, we were pounded with record snowfalls — and the DOT cleaned our highways without a hitch.

    If a company can’t afford a worker, it will lay him/her off. If the State can’t afford a worker, it should do the same.

  42. Megan McArdle at the Atlantic Monthly has an intereting point about the UAW and GM Here.

    When GM (or any other company, for that matter) negotiates with its employees to pay a specific amount of retirement benefits, they have to put that liability on their balance sheet. These liabilities are obviously estimates: you don’t know when someone is going to die. But there are actuaries that can figure these things out. They aren’t always accurate, but they should be wrong high as often as they are wrong low. If workers live longer than assumed, then it’ll cost GM; if the investment portfolio does poorly, that’ll also cost them (you invest the money you set aside).

    So the retirement pension benefits aren’t what’s causing the big problem.

    The health benefits to retirees are what’s causing the wheels to come off.

    Under the way the UAW is set up, retirees have more power when negotiating contracts than the current employees. The retirees want the health care provisions to be very generous. So the exisitng workers have to go along with this because the power rests with the retired workers.

  43. Matt,

    Unfortunately, both Dobb and gmr are right. Soaking the rich, in this economic environment, is not an option. Besides, every attempt within the last decade to shore up the revenue side has ended with a burst of irresponsible spending. Time to pay the piper. The only question is: Who will tell the unions? It matters who tells them. In the past, the Democrat Party has used these opportunities to curry favor with the unions and, of course, to extract from them party favors. The governor, in these little tete a tetes, has played the heavy; Rowland was good at this posturing. This time it should be different: The word should come from those the unions respect – that would be the incoming Speaker of the House, among others. Unions, of course, cannot bear the whole weigh of the spending reductions. But it would be fatal to raise the wrong kind of taxes at a time when the Gold Coast is in retreat. You know what that means? It means that government officials have to stop lying to those they govern. It was never possible to sustain this level of spending by passing the buck top the rich. It’s tiomme for everyone to grow up

  44. I’m sorry, but while there are surely some traders who are out on the bread line, if you’re pulling in a million plus dollars a year, you’re going to have to kick in a little more than a secretary pulling down $45K with modest bennies.

    Making some granny who spent 40 years as a court reporter or whatever switch from TV dinners to cat food just so Scrooge McDuck can keep feeding his capital gains into this insane financial krakatoa we’ve been watching erupt these last several months is totally out of the question.

    I appreciated that Al said that “[W]e are not going to close a $6 billion dollar gap without a lot of blood letting from us all.” That’s the kind of spirit that absolutely has to precede any kind of meaningful concession from anyone — especially anyone who has a contract. But it seems like a lot of people just want to screw the unions.

  45. Re: Auto companies and healthcare….

    Didn’t we just buy an enormous insurance company? It occurs to me that if the real problem is just healthcare costs, then perhaps we have already spent the money required to bring the automakers back into the black.

  46. Matt,

    Try to get it. The hole in state revenues is the result of the inability of the state to get water from a stone. The answer to a parched thirst cannot be, under these circumstance, to ring more water from the stone. The money ain’t there: That’s the problem.

  47. I’m sorry, but while there are surely some traders who are out on the bread line, if you’re pulling in a million plus dollars a year, you’re going to have to kick in a little more than a secretary pulling down $45K with modest bennies.

    The base rate of state income taxes for the $1 million earner will be $49,800 (3% on the first $10,000, then 5% thereafter) less any deductions that the state has passed to encourage people to do certain things. The $45K earner will pay $2,050 less deductions. Unless of course the $1 million earner works on Wall Street. Then, he or she will pay a lot more, but none of it will flow to Hartford.

    The problem is, there aren’t that many people that make $1 million. According to the IR S (Excel link), of the 138 million returns filed in 2006, only 354,000 people in the entire country had income of over $1 million. Now, take the fact that the stock market has recently dropped 40%. This year, it’s going to be a LOT fewer people with over $1 million.

    I don’t know how many of these people WORK in Connecticut, but even if it’s five percent (which would be amazing, considering we’re less than 2% of the total population; people that live here but work in NYC don’t count), that is only 17,000 people. Bear in mind also that people with such a large income can usually defer it for a year or two by not cashing out their investments. (If it’s mostly investment income for things they’ve bought, they’d be taxed in CT even if they worked in NY, but if it’s options on their NY company, they’d be taxed in NY).

    So there simply aren’t enough of the super wealthy to close the gap in the state budget.

  48. According to that spreadsheet and your estimates, a 1% increase in the income tax on those making over $1 million would raise an additional $605 million dollars (or $1.2 billion over the 2 years that we’re talking about for this deficit.) Of course, if CT had a disproportionate number of those making over $10 million, that number would be much higher.

    That said, I don’t think the rich should get soaked alone, but they’re going to have to chip in like everybody else.

  49. [quote comment=”38696″]JM

    You want to check on that one. The state cannot violate a contract, but it can call for re-negotiation. I agree with you that it is not likely the unions would wish to re-negotiate contracts so favorable to them. But “not likely” doesn’t cut it in perilous times like these. The state should ask for re-negotiations, and legislators should line up in favor or against. I’m not sure it’s likely that legislators would not wish to re-negotiate. If they were to favor re-negotiation, we have a new ball game. If unions prevail over them, then we will know for certain who is running the state. Nothing ventured, nothing gained.[/quote]
    Under current law, I agree. However, the state’s collective bargaining system exists soley because State Law allows it to. There is no external mandate, such as the Federal Labor Relations Act in the private sector, that requires collective bargaining. There is no question in my mind that the Legislature (with the Governor’s agreement) could repeal these laws, declare all agreements void (prospectively, not retroactively), de-certify the unions, etc. And the State Courts would uphold the judgements of the the other two Branches.
    Assume that the current economic decline continues for an extended period of time. The legislature would not be required to sit back until 2017 and helplessly watch the finances and functions of state government dwindle into oblivion while the State unions poked their fingers in everybody’s eye. For a variety of reasons, not the least of which is that a 17 year agreement probably would be found to unconstitutionly bind the hands of future Legislatures, the Courts would uphold the nullification of the collective bargaining system.
    This is a wonderful academic debate, but both you and I know it isn’t going to happen that way. The current Legislature doesn’t have the heart for it, and the unions won’t push it to the brink of their own extinction. To your point, however, there are “renegotiations” and then there are renegotiations. The last time they “renegotiated” we ended up with this absurd 17 year deal that’s eating our lunch.
    Finally and again to your point, it seems to me that as a prerequisite to asking the unions to renegotiate, the Legislature must “re-structure” the benefit packages for all non-union state employees (including themselves). They all enjoy the same benefits, and common sense says that the management has to lead and take the hit before it can expect the unions to do so. This action has no legal pitfalls, and can be done tomorrow. So I agree that the Legislators should line up to ask the union to re-negotiate. But watch what they do, not what they say. Their actions (or lack thereof) will speak for themselves.

  50. By the way, does anyone know where I might find up to date estimates about how much investing a dollar into mortgage-backed securities returns to our economy as compared to, say, investing in infrastructure, early childhood education, or healthcare?

    I just wonder if we could calculate out where we’d be financially today if Bush and Congress had decided to put those trillions of dollars into our infrastructure and well-being instead of into the hands of a recklessly irresponsible investor class.

  51. (I should say, leaving it in the hands of a recklessly irresponsible investor class — my comments implied that the 90s-era tax framework is the status quo against which Bush’s tax policy should be measured, but I didn’t say that.)

  52. Matt w,

    BTW just to be clear when I say we all need to pitch in, I do 100% mean that. I also think we should consider something else here that so far I have not seen mentioned. There are other ways for the state to get concessions from the unions with out having to reduce their benefits.

    How about we look at some of the contractual language, and work rules, and cut out the waste, in an effort to avoid compensation cuts?

    Like when we are stuck in miles of traffic, filling the atmosphere with green house gasses as we basically burn gallons of fuel in our cars going nowhere for hours because of some DOT work crew miles up the road.

    When we finally get there we see 12 DOT guys at “work” on the site. 9 of which seem to have jobs that require them to simply stand around. 2 of the 12, obviously lower in seniority seem to have the job of watching the least senor of the 12 push a broom. On either side of this all too familiar scene we find several either local, or state police cars. Lights flashing, and engines running. They also are pumping green house gasses into the atmosphere so the 3 or 4 cops assigned to this “work site” can take turns keeping warm while being so bored stiff they barely can direct traffic around this man made bottle neck and drink a coffee at the same time.

    I certainly have no problem seeing that the guy pushing the broom is paid a fair days pay for a fair days work. In fact I have no problem seeing that the entire rest of this crew gets what should be fair days pay for the actual work they did as well.

    I am sure anyone who also feels that those at the top of the income and tax ladder should pay more than they aleardy do, so that they in fact pay their fair share into this system will agree with me. After all, fair is fair. I guess we just need to agree on what fair means.

  53. [quote comment=”38726″]According to that spreadsheet and your estimates, a 1% increase in the income tax on those making over $1 million would raise an additional $605 million dollars (or $1.2 billion over the 2 years that we’re talking about for this deficit.) Of course, if CT had a disproportionate number of those making over $10 million, that number would be much higher.

    That said, I don’t think the rich should get soaked alone, but they’re going to have to chip in like everybody else.[/quote]

    I said 17,000 people earning over $1 million in the state would be high, but let’s go with that number. You say this would generate $605 million per year. That’s an extra $35,588 in taxes per person. If you are raising the taxes 1%, that would mean that these people would face taxes on $3,558,823 in income. But since this bracket would take effect only after $1 million (the first $1 million wouldn’t be taxed a the higher rate), that would mean that the average of this group made $4.5 million. I am not sure if this is the case or not. But if there are only 12,000 people instead of 17,000, that’d really change the numbers. And 17,000 would mean that 5% of all million dollar earners earned that money within Connecticut.

  54. JM

    Very lucid, and very powerful prescriptions. Now all we need is a party to advance them.

  55. [quote post=”2365″]I just wonder if we could calculate out where we’d be financially today[/quote]
    No, we couldn’t.

  56. [quote comment=”38726″]According to that spreadsheet and your estimates, a 1% increase in the income tax on those making over $1 million would raise an additional $605 million dollars (or $1.2 billion over the 2 years that we’re talking about for this deficit.) Of course, if CT had a disproportionate number of those making over $10 million, that number would be much higher.

    That said, I don’t think the rich should get soaked alone, but they’re going to have to chip in like everybody else.[/quote]

    Wrong again. First, you’re assuming that increasing marginal tax rates by a certain percent will lead to an increase in income tax revenue by that same percent. That’s incorrect — the Laffer curve teaches that the revenue will be different: higher if tax rates are too low, and lower if tax rates are too high. I’m betting on “lower.”

    Next, you’re not just increasing taxes on millionaires by 1%. You’re increasing them by 20% — a person who used to pay a 5% tax rate will now pay a 6% tax rate, which will lead to a 20% increase in their tax bill. Aside from being ridiculously unfair, this is terrible policy: Citizen X, Joe the Plumber or anyone else who just got a 20% increase in their income taxes will, undoubtedly, find ways to shield his/her investments. Some will be legal, some will not. Either way, as our current economic predicament tells us, Connecticut’s tax revenue desperately depends on attracting more millionaires to the state, not chasing them away. That’s what a 20% increase in taxes will do, without question.

    Finally, it’s not about having the rich “chip in like everyone else.” Look again at that spreadsheet — if it is correct, over 16% of our tax revenue comes from 0.5% of the returns, and 21% of our tax revenue comes from just 1% of the returns. The rich aren’t “chipping in like everyone else,” they’re chipping in for everyone else.

  57. I suspect that Matt has read his G. B. Shaw: “A government that has the power to take from Peter to reward Paul can always depend on the support of Paul.”

    Naturally, the Peters are significantly outnumbered, which means that in a democracy Paul will be allowed to plunder Peter at will. The real crunch comes when Peter’s fortunes flag, which is what has happened in Connecticut. Paul is now used to a certain level of comfort supplied under duress by Peter. He has become high maintenance.

    That is the present situation, politically. But not even the shrewdest politician can reinvent the laws of human nature – or economics.

    And, rather unfortunately for Paul, we live in a federated union in which Peter can always seek out less plunderable environments elsewhere. If your coach continually gets robbed by brigands, you find another way.

    And that is what has been happening in this state for a long while. This Thankgiving, there will be family members at the table who come to us from outside the state, whereas ten years ago they might have traveled to our houses by walking down the block. They are not coming back. And others will leave, unless we can create a state in which they feel welcomed.

    Why Republicans have not been able to make this argument more persuasively I’ll never know. But three writers have done a pretty good job of it here.

  58. I’ve always wondered why these financial supermen keep commuting into New York, where their incomes are subject to much higher state and local taxes, instead of moving the various Wall Street institutions to a lower tax jurisdiction like Connecticut or Mississippi or what have you.

    I also wonder how conservatives always know that we’re past the peak revenue point on the Laffer Curve. The CBO disagrees. St. Ronnie disagrees. But somehow, the conservatives know that lower taxes are always better.

    As far as why Republicans can’t make those arguments more effectively, it’s because the theories they’re espousing are a bunch of crap, and the public has caught on.

    http://www.nytimes.com/interactive/2008/10/14/opinion/20081014_OPCHART.html

  59. >>where their incomes are subject to much higher state and local taxes, instead of moving the various Wall Street institutions to a lower tax jurisdiction like Connecticut or Mississippi or what have you.

    Because big business isn’t any brighter than big government.

  60. [quote comment=”38741″]I’ve always wondered why these financial supermen keep commuting into New York, where their incomes are subject to much higher state and local taxes, instead of moving the various Wall Street institutions to a lower tax jurisdiction like Connecticut or Mississippi or what have you.

    I also wonder how conservatives always know that we’re past the peak revenue point on the Laffer Curve. The CBO disagrees. St. Ronnie disagrees. But somehow, the conservatives know that lower taxes are always better.

    As far as why Republicans can’t make those arguments more effectively, it’s because the theories they’re espousing are a bunch of crap, and the public has caught on.

    http://www.nytimes.com/interactive/2008/10/14/opinion/20081014_OPCHART.html%5B/quote%5D

    To quote St. Ronnie, “there you go again.” It sounds like you’re saying, “we should raise taxes because New York has high taxes — then we’ll be like New York!” That’s as dumb as it sounds. The Laffer Curve is all about where taxes should be, in that particular place and at that particular time. In any event, over the last several years there have been brief talks (threats?) to move the New York Stock Exchange to New Jersey, and ask yourself why so many companies have moved into Stamford — just 45 minutes from the world’s financial center, but subject to different tax rates. (Believe me, it’s not the “Malloy Magic” that lures them there.)

    Do you have any proof that the CBO disagrees, or that Reagan disagrees?

    Also, your two links add absolutely nothing to this argument — just so you know. Nothing. If you’d like to educate yourself, however, look here:

    http://www.taxfoundation.org/news/show/250.html

  61. Don

    “Why Republicans have not been able to make this argument more persuasively I’ll never know. But three writers have done a pretty good job of it here.”

    IMO, Just like my comments in the automotive discussions in this thread I just think Republicans have lost track of the market they want to serve.

    These days Americans want everything in very small sound bites. When I try to explain finances to my wife for example, she gives me all of 30 seconds of attention before her eyes roll up, her brain turns off, and I get the typical response, you worry about where the money comes from, I’ll worry about how to spend it.

    If the Republicans want to be able to make their argument more persuasively I say first they need to understand that simply saying; cut taxes and spending, does not resonate with enough people to get them elected.

    Why? Well maybe for starters here is one small example. When was the last time no matter who got elected to office your property taxes actually were cut? When was the last time your town, the state, or the Feds, actually cut spending, no matter who gets elected ? It simply just does not happen. With so many politicians telling us they are running for office to cut our taxes, and control spending, you would think by now we would be paying no taxes at all.

    I believe the Democrats have done a very job of painting the Republicans as the party of business. The Republicans have done IMO very little to explain to the average American in 25 words or less that if they own a 401k, or other investments, and were depending on them for their retirement they should be very concerned about business. In other words business is not the enemy. Rather having no business to provide the average American a job is. We all need and are critically dependent on the well being of business.

    Look at this past week. Obama is not even in office yet, and he has a “plan” to spend another fortune to add or save 2.5 million jobs!!!!!! WOW!!!!!!! That’s fantastic……… Exactly how we can tell how many of these 2.5 million jobs he speaks of will be saved ones, I don’t know, but it sure makes for a great marketing piece showing the leadership of him and his party.

    Meanwhile the nasty Republicans being the party of business are busy laying off people in hopes keeping the business alive to provide some jobs, and maybe turning a profit for the stock holders. You know those same average Americans with the 401k’s who are all complaining how they are a fraction of what they were 3 months ago.

    Bottom line for me is that until the Republicans learn to do a better job of understanding who they are, what they believe in, and how to connect themselves with the average American there is little hope they can get the message you point to across.

    Oh yah, it wouldn’t hurt them to also learn from guys like Chris Murphy…… Get out and knock on some doors. They need to get their message directly across themselves, not let the democrats do it for them.

  62. Bottom line for me is that until the Republicans learn to do a better job of understanding who they are, what they believe in, and how to connect themselves with the average American there is little hope they can get the message you point to across.

    Al,

    You won’t get an argument from mr on that point. You put it very well. Maybe if Bob Dylan could put it to music…

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