From Hartford to Kansas, Neoliberalism = Disaster

by David Samuels

This column appears in the June 15 – 22 edition of the Hartford News.

 

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Media lineup, including False Choice: the Bipartisan Attack on the Working Class, the Poor and Communities of Color. https://hendu39.wordpress.com/2015/12/20/community-party-media-3/

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CITY OF HARTFORD & STATE OF CONNECTICUT EMPLOYEES,

Call and email Gov. Dan Malloy and your legislators. Request data on how many jobs were created by each company that receives tax subsidies from the State of CT. Also ask what their position is on 14 CT businesses stashing a combined $180 billion in offshore profits, as reported by the Hartford Business Journal in 2016 (see below). Request a WRITTEN RESPONSE. The full list of CT corporations receiving tax subsidies from the state is available through the New York Times interactive database. We are sharing page 1 of the list. http://www.nytimes.com/interactive/2012/12/01/us/government-incentives.html

 

Gov. Malloy’s office: Phone Number: (860) 566-4840 Toll-Free: (800) 406-1527 TDD: (860) 524-7397
Email:  http://portal.ct.gov/en/Office-of-the-Governor/Contact-Governor-Malloy/Share-your-Opinion-with-the-Governor

Visit the CT General Assembly website to identify and contact your state representative and senator. Call and email them. BE POLITE.

https://www.cga.ct.gov/asp/menu/cgafindleg.asp

 

 

Policy Watch

 

Austerity: Recipe for Failure

 

Last week I watched the Senate debate on the Connecticut Republicans’ state budget proposal, which includes provisions that would strip state employees of our collective bargaining rights. It’s not fun being a state worker right now. Gov. Dan Malloy and the Democrats are coming after us with an ax, while Senator Len Fasano and the Republicans want to toss us into a thresher. Neither party (both swimming in corporate donations) wants to address corporate welfare and other business tax breaks, which cost this state $7 billion in revenue every year. CT companies stash $180 billion in offshore accounts, according to an article from the Hartford Business Journal. http://www.hartfordbusiness.com/article/20160304/NEWS01/160309951/cts-largest-corporations-hold-billions-in-offshore-profits.

 

Luke Bronin, a carpetbagger from Greenwich whose 2015 mayoral campaign was bankrolled mostly by donors outside of Hartford, has taken preliminary steps toward the city filing for bankruptcy. Bronin has had conversations with law firms that specialize in bankruptcy proceedings. While Bronin wears a long face and pretends that he doesn’t want to go this route, the reality is that bankruptcy would be the express lane to Bronin’s ultimate goal: busting the municipal unions. In 2016 Bronin introduced legislation to strip city workers of their collective bargaining rights. http://www.courant.com/community/hartford/hc-hartford-financial-legislation-0317-20160316-story.html The public sector is the largest employer of Black people and women. The bipartisan neoliberal attack on state workers and City of Hartford employees will only fuel racial wage and wealth disparities. Black people earn 60 cents for every dollar whites make, and possess 12 cents of net wealth for every dollar whites have. Houses are the primary wealth asset for Black people; you’ll see the significance of that statistic shortly.

 

Black Agenda Report commentator Abayomi Azikiwe reported in 2013 on Detroit residents fighting to stop the catastrophic effects of bankruptcy on their city. Unfortunately these brave citizens were unable to stop the city from filing for bankruptcy.

 

*****

‘“I suspect there is a small group of racist rich men and banks who have been pulling the puppet strings of Detroit for a very long time.'” Contradicting what the corporate media editorial boards have promoted in chorus with the multi-millionaire Governor Rick Snyder and his appointed emergency manager Kevyn Orr, 110 people filed objections to the forced bankruptcy of the City of Detroit. The hearing took place on September 19 and was widely covered in the local, national and international press.
This extraordinary hearing had provided only a small window of time for legal action. Many of the people that testified were retirees, city workers, community organizers and professionals who met the deadline set by Judge Steven Rhodes to submit their objections.
Outside the federal courthouse on Lafayette Blvd. downtown, members of the Moratorium NOW! Coalition carried a banner which read “Cancel the Debt: Jobs, Pensions, City Services, the Banks Owe Us!” Later a group of active firefighters gathered to demonstrate their displeasure with the state of affairs facing the people of this majority African American municipality.
Testimony Illustrates Broad Opposition to Bankers’ Rule
Michael Shane, a resident of the northwest side of Detroit, told the bankruptcy court how the impact of predatory lending carried out by the banks had contributed to the economic crisis of the city. He described the practices of the banks as illegal and racist in its overall character.
“The financial crisis in Detroit was triggered by the housing crisis where an estimated 100,000 home foreclosures occurred and almost a quarter million people left the city. The banks issued predatory loans, targeting Detroit and other communities of color in a racist and illegal manner,” Shane noted.
Shane then emphasized that “The banks have already been fined tens of billions of dollars.  And former bank employees are testifying under oath, confirming the illegal and racist practices of the banks. Some of this testimony includes racially offensive language that cannot be repeated in polite company.  These banks include many of the same banks who hold Detroit’s debt.”
“Property and income taxes dropped precipitously during this crisis, causing huge losses to the City of Detroit.  And to make matters even worse, the banks refuse to pay property taxes on homes seized after foreclosure,” Shane told Judge Rhodes.
Another objector to the bankruptcy filing was Cynthia Blair, the widow of a Detroit police officer. Blair has been active in attempts to mobilize retirees and their families against the program of cuts and austerity being imposed by Orr and Snyder.
Blair said “The bankruptcy could take me and my daughter’s pension away. And we would be thrown directly to the welfare rolls.”
“The banks issued predatory loans, targeting Detroit and other communities of color in a racist and illegal manner.”
According to the figures released by the emergency manager, Detroit has over $22 billion in long term debt. These purported debts are to the banks, bondholders and insurers who have played the most significant role in the decline of the city.
Orr is attempting to cut a deal with the banks and bond insurers where they will be paid 80 percent of what they say is owed to them by Detroit while pensioners and workers are being chained with massive obligations that derive directly from financial practices dictated by Wall Street and the corporations, many of whom are based in the metropolitan area.
The automobile firms of General Motors and Chrysler were bailed out in 2009 by the federal government. Nonetheless, the pre-packaged bankruptcy and restructuring resulted in the loss of tens of thousands of jobs and small businesses such as car dealerships which employed skilled and often unionized workers.
People in Detroit are saying that the municipality is not a private corporation and that people have a vested interest in maintaining their jobs, salaries, healthcare benefits, pensions and city assets. Many more people are agreeing with the slogans and program advanced by the Moratorium NOW! Coalition calling for the cancellation of the bank debt and the holding of the financial institutions and corporations accountable for the damage they have done to the city.

*****

Connecticut Republicans have launched an offensive to take the Governor’s Mansion and control of the General Assembly in 2018. The sad truth is that the right-wing of the duopoly is pushing fiscal policies based on tax cuts, that are a blueprint for even greater disaster. In Kansas, GOP Gov. Sam Brownback implemented a plan developed by economists Stephen Moore (Heritage Foundation) and Arthur Laffer, who are also involved with President Donald Trump’s war budget. Center on Budget and Policy Priorities columnist Michael Mazerov reported on the Moore / Laffer plan.

“Moore and Laffer were principal architects of the tax cut plan that Kansas Gov. Sam Brownback recommended and the legislature enacted in revised form in May 2012.  Moore described his and Laffer’s role in developing the plan, its key features as enacted, and its objective this way:
A few years ago, Arthur Laffer and I advised Kansas Gov. Sam Brownback (R) on an aggressive tax rate reduction plan to help revive an underperforming Kansas economy.  The end result was a reduction in income tax rates (the top rate fell to 4.5 percent from 6 percent, with further reductions planned for future years) and a feature that reduces taxes on passthrough income earned by small businesses to zero.  Our goal, and one shared by Brownback, is to make Kansas the 10th state without an income tax.[7]
The Kansas tax cut package has had a deleterious impact on the state’s financial stability and the provision of critical services.  For example:
Personal income tax revenues in the fiscal year ending June 30, 2016 (fiscal year 2016) were almost $700 million lower than those received in fiscal year 2013,[12]when the tax cut first took effect, even though the economy nationally is stronger in 2016 than it was in 2013.  Receipts dropped immediately by slightly more than $700 million (24 percent), and the meager economic growth that occurred in Kansas from 2014 to 2016 boosted collections by only $30 million, or less than 2 percent.[13]
Total General Fund revenues in 2016 were $570 million below 2013 levels, despite significant sales and cigarette tax increases enacted to partially offset the income tax losses.[14]  The General Fund’s ending balance fell from $709 million in 2013 to $40 million in 2016 (just 0.7 percent of General Fund spending).[15]  That’s important because Kansas’ General Fund balance is its “rainy day fund.”[16]  Should a recession hit and tax revenues shrink as household incomes and retail sales fall, the state will need to cut programs or enact tax increases almost immediately because it will have very little savings to tap.
The General Fund’s depletion occurred even though the state transferred to the Fund substantial tax revenues that were collected to finance road maintenance and construction.[17]  The resulting reduction in infrastructure funding has forced the state to postpone numerous highway projects indefinitely.[18]

Because the tax cuts leave less state revenue with which to repay people who lend the state money by buying its bonds, Kansas’ bond rating has been downgraded twice — in 2014, and most recently on July 26, 2016.[19]  Lower bond ratings mean that the state will likely have to pay a higher interest rate on future borrowings, raising the cost of infrastructure projects such as school construction and road building.”

CBPP columnist Nicholas Johnson reported on the bipartisan effort by Kansas lawmakers to undo the damage of the Brownback economic plan. The Connecticut General Assembly would be wise to follow the course being taken in Kansas. “The Kansas legislature wisely voted to start rebuilding the state’s lagging economy by eliminating unwarranted tax breaks and raising much-needed new revenue to invest in schools and other vital services that will help the state and its people now and in the future. A bipartisan supermajority of both houses recognized the damage that Governor Brownback’s tax cuts have caused and came together to choose a different path. This vote represents a striking repudiation of far-right wing economic orthodoxy and, as such, will influence fiscal debates far beyond the state’s borders. Kansas is now choosing a constructive and forward-looking approach to its finances, and other states will be taking notice.”

 

Follow CP on Twitter for state, national and world news headlines. https://twitter.com/CommunityParty1 Check out my Facebook page for daily news commentary. https://www.facebook.com/david.samuels.948 Listen to So-Metro Radio the first, third and fifth Tuesday of each month at 8:00 PM for commentary on urban issues http://www.sometroradio.com/  Check out our No Sellout blog (https://hendu39.wordpress.com/). Contact us at samuelssloflo@aol.com.

 

 

 

 

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