Like Scripture’s prodigal son, many states have spent their inheritance. They have little or no “cushion” or reserve funds, and confiscatory taxes have driven away many businesses and high-income individuals. But the United States collectively cannot afford the generosity of the father in the most famous parable of the Christian world. This isn’t about grace. Much grace, in the form of vast grants of funds, has already been given. It’s about prudence. That which gets rewarded gets repeated. Should Congress overlook vast legacies of misspent money and staggering debts because the whole country is reeling?
Let little Connecticut be the example. The Nutmeg State has had about 3.5 million people for almost 20 years. In a thorough 2016 analysis of 2014 data, Governing magazine found that it had relatively few state and local employees per 10,000 residents: 211 vs. New York’s gigantic 316. But Connecticut — quiet, presumed wealthy Connecticut, home to Yale, insurance companies, and bankers commuting to “the City” before covid-19 arrived — is deeply, terribly mismanaged and has been for three decades.
As the debate in Congress unfolds, Congress ought to hold hearings and use Connecticut as an illustration of the problem before it. Carol Platt Liebau, head of the state’s esteemed Yankee Institute for Public Policy, is a Princeton and Harvard Law grad, a former Hill staffer, and a brilliant, generous, compassionate public intellectual and activist, and she should be a star witness. My last column quoted Liebau, and I am returning to her here because she represents hundreds of similarly situated state activists who have tirelessly worked across the country to bring reform to public-employee-union-dominated state legislatures, often at the cost of being vilified by the same. These unions are the giant bullies of the country’s politics, and while we admire teachers, nurses and prison guards, their union representatives are simply “special interests,“ like the National Rifle Association and the Koch network, but with different members, different agendas and better branding and allies in the media.
“Connecticut is a beautiful state that’s long been one of America’s richest and best educated,” Liebau wrote me Friday. That was a day after the McConnell-Cuomo debate on “blue state bailouts” took on volume and edge as New York Gov. Andrew M. Cuomo (D) did what President Trump so often does: personalize an issue by attacking the messenger, in this case Senate Majority Leader Mitch McConnell (R-Ky.).
But keep your eye on the ball. This is about the citizens of badly governed states such as Connecticut. “After 30 years of mismanagement,” Liebau noted, Connecticut is ”facing a crisis of its own making.” Cuomo is trying to divert attention from the core dilemma, using genuine suffering and an anti-McConnell press as a shield. But Cuomo shouldn’t be allowed to cloud clear vision of the massive problem.
“From destroying its status as the Northeast’s tax haven by implementing a state income tax in 1991, to providing lavish benefits for government unions funded through continuous tax increases on middle class and affluent taxpayers, Connecticut’s politicians have sold out state residents to advance a far-left agenda pushed by its dominant special interest group: government union leaders,” Liebau continued.
“Unfortunately, the deals made between union leaders and the politicians were costly promises that could never be kept and now the bill has come due,” she concluded. “A bailout will simply enable more of the destructive, irresponsible policies that created this crisis. We may need tough love to fix something so broken.”
The coming debate isn’t about Trump, Cuomo or McConnell. It’s about structural federalism, the genius of our republic. This isn’t about which states contribute how much to the “federal pot” as Cuomo, aiming his rhetoric at this straw man, indignantly proclaimed. Every U.S. citizen contributes and receives benefits and services under the same uniform federal tax code. But not every state taxes its people the same way. Some states provide fewer services and take less in taxes; others do the opposite. Should the former pay the debts of the latter because of the coronavirus?
Connecticut was already on fiscal life support before the virus arrived. Should federal aid be conditioned on reform of the state’s profligate spending on a small group of public employees and pensioners? Rule-of-law conservatives are wary about jamming federal medicine down the throats of states already struggling to survive. Structural federalism was ravaged by Obamacare. Steamrolling it again in a virus rescue, relief and reform package seems contrary to first principles. But Cuomo’s raised voice and feigned outrage shouldn’t silence citizens seeking the right balance between compassion and foolishness. The calmest voice usually has the best argument.
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