For more than a century, the defense and insurance industries have been bulwarks of the Connecticut economy but within the last year, both are waving distress flags at the state’s leaders.
United Technology’s CFO Gregory Hayes bluntly told reporters that, “Anyplace outside of Connecticut is low-cost.” Similar themes were again sounded this week by Aetna CEO Mark Bertolini who said, “. . . Quite frankly, Connecticut falls very, very low on the list as an environment to locate employees.”
The message from these industry leaders is clear. Connecticut’s economic problems aren’t just a byproduct of the recent downturn. The state faces a competitiveness crisis that won’t go away until it is addressed.
Liberal leaders in the legislature will lay out their vision for how to confront the matter starting Monday at a joint meeting of the Public Health, Human Services, and Insurance and Real Estate Committees as they hold a public hearing on the landmark SustiNet health care legislation.
Democratic officials have zeroed in on health care and energy costs as two key burdens on Connecticut’s economy and are keen to address both in this legislative session.
Though they rightly assert that health insurance is too costly in Connecticut, their solution – SustiNet – is equally unaffordable.
Though proponents of the law say that it will save the state $224 million under the pessimistic scenario and $425 million under the optimistic scenario, the vast majority of the “savings” are actually costs shifted to the federal government. In an era of trillion dollar federal deficits and a debt rapidly approaching parity with the GDP, this makes SustiNet a fingers-crossed, toss a penny in a fountain, wear your lucky underwear kind of plan.
It would be deeply irresponsible for the legislature to consider such a plan even in good times; in the current fiscal crisis legislators should meet it with startled disbelief. But if you go on over to the Legislative Office Building today, there they will be. If you listen closely enough, you might be able to hear “Nearer my God to Thee”, too. Feel free to hum along.
Being unaffordable simply isn’t a dealbreaker because for many champions of the law, that’s a happy byproduct. In their November 2010 Fiscal Accountability Report, the Office of Policy and Management noted the “ratcheting effect” that economic downturns have on taxes as budget deficits compel tax hikes which, once the economy recovers, fund new programs that grow constantly until the next downturn which necessitates further tax increases.
SustiNet will be one more big turn of that ratchet.
The people will see if Governor Dannel P. Malloy takes the opposite approach to solving the competitiveness crisis on Wednesday when he delivers his budget address to the General Assembly. In next-door New York, Governor Andrew Cuomo is turning heads and winning high praise by pledging significant reductions in the cost of government, streamlined bureaucracy, and no tax hikes, all premised on the shocking idea that making it easier to compete in the economy improves competitiveness.
Whether Connecticut will try to compete by becoming more competitive or by creating new programs is the decisive question that policymakers face. This week, we’ll start to see what their answer will be.
For the opposing view on this story, check out Jon Pelto’s “Wait, What?” for his insightful piece on SustiNet.