‘Transformational’ state budget misleads amid high inflation | Chris Powell

Has Connecticut ever gotten a state budget more cynical than the one about to be enacted by Governor Lamont and the Democratic majorities in the General Assembly?

According to the Connecticut Mirror, more than half the budget’s $600 million in tax cuts will not be permanent but will expire within a year, when the state election this November is safely past.

It’s worse with the budget’s extension of the suspension of the state’s gasoline tax.

When, in March, the governor and legislature suspended the tax for 90 days, they enacted a restoration date of June 30. It took them a few weeks to realize that this scheduled the tax to return with a loud and painful thud in the middle of the election campaign. So now the restoration date has been delayed to Dec. 1.

That $600 million in tax relief is not even a third of the $1.9 billion in raises and bonuses contained in the new contract just given by the governor and legislature to the state employee unions, whose members are supposed to be regarded as heroes for working throughout the virus epidemic, as if everybody else didn’t work as well or else lose their jobs and paychecks. State employees never lost either.

The budget’s credits to municipal property taxpayers, about which the governor and Democratic legislators are especially proud, may not do much more than facilitate municipal property tax increases that absorb whatever taxpayers gain from the state. Already the severe inflation in residential property values over the last two years is causing big tax increases for property owners even where municipal property tax rates are holding steady or being reduced.

Many if not most residential property taxpayers may pay more despite the state tax credits.

Perhaps more beneficial about the budget are its increased spending and tax credits for child care, mental health, and other social services. State Rep. Sean Scanlon, D-Guilford, House chairman of the legislature’s Finance Committee, says the budget will be “transformational” for families with children.

But just as inflation will devour the property tax relief, it also will devour much if not all the income support and social service money, making the new budget much less “transformational.”

What’s happening here has begun to look like a racket.

First the federal government creates vast new amounts of money to enable spending far beyond anything the national economy and even the world economy produce. This devalues the dollar against goods and services, a devaluation people are seeing as record inflation.

Then the federal government gives some of this new money to the states, which increase their spending and distribute some of the money to their people, as Connecticut has been doing. In their turn people spend the new money but, amid the record inflation, they will be lucky to come close to maintaining their living standards, even as their politicians claim credit for all this largesse as they campaign.

This was illustrated the other day as U.S. Sen. Richard Blumenthal, seeking a third term, visited Manchester to call for another $40 billion in federal epidemic relief grants to the restaurant industry on top of the $60 billion already distributed to restaurants around the country.

There was no discussion of where the new $40 billion is to come from. It was just assumed that it would be paid from money creation and inflation — assumed that money now has become infinite. So why only $40 billion more for restaurants? Why not $100 billion more, and still another hundred billion to be credited to the checking accounts and credit cards of restaurant patrons so that everyone can go out to eat heartily even as the world is starting to face a food shortage and starvation is predicted for the poorest nations?

“In the sweat of thy face shalt thou eat bread” — well, maybe after the election.

Creating and distributing money when there is great slack in the economy is one thing.

Creating it when inflation is roaring is something else.

Will people really not be able to understand, before the election, that they are being bribed with their own depreciating money?

Chris Powell is a columnist for the Journal Inquirer.


https://www.journalinquirer.com/opinion/chris_powell/transformational-state-budget-misleads-amid-high-inflation/article_57996c14-c9b8-11ec-93f8-838510d2a1c4.html