I ask again, what date do we reopen our state economy? There are economic
consequences to any governmental decision. We can see this on a constant
basis in Connecticut. Governor Lamont's decision to shut down Connecticut's economy is having enormous repercussions to the state and its citizens.
Those signing up for new unemployment claims is at an all time high with over 402,000 new claims being filed in the past few weeks with more being processed. These claims equal levels not seen since the Great Depression of 1929-1933. We are seeing now in Connecticut an estimated 18 to 20% unemployment rate or roughly one in five workers are now out of work due to this shutdown.
Obviously high unemployment rates create massive economic issues for Connecticut. These economic issues include a massive downturn in tax revenues being collected, a massive cost in paying out unemployment benefits, and a massive increase in the state debt which is currently $140 billion dollars in short and long term debt along with unfunded liabilities. How much higher will it go? In my opinion we will see an additional $5 to $15 billion dollars in debt be added due to this shutdown. We also see a massive budget deficit for Fiscal Year 2019-2020 due to the the lack of tax revenue coming in. Governor Lamont has simply said he is glad we have a rainy day fund of approximately $2.5 billion dollars. How far is that going to go during this crisis? When and how will it ever be replaced in the future if we have a long term economic contraction in the state? Why hasn't Governor Lamont instituted cuts in state spending for all non essential non virus related spending? Federal funds for the virus being sent to Connecticut will not cover all the state monies being spent at this time.
We know now the new commission appointed by Governor Lamont has until May 20th just to submit a report to him on how to reopen the economy. I find it interesting that Indra Nooyl who was the former CEO of Pepsi is co-chairing this committee. I would think that her background in private industry would allow her to move quickly and come up with this report in far less time than on May 20th. As a former CEO of Pepsi would she move this slowly to resolve a problem of this magnitude in her former company? I also find it very interesting that no elected State Representatives or Senators were picked for this committee. In reviewing the individuals on this committee and their backgrounds I really do not see many new ideas and policies being generated from them nor do I see how this type of committee follows our state constitution? How is this legal? I thought we had an elected Representative Republic/Democracy form of government where we elected individuals to represent us? However as we see in a crisis the state seems to avoid the state constitution and laws our state was founded on. We as taxpayers must accept now the decrees of this committee now as the rule of law to govern our economic lives here in the future. Why?
What an economic mess.
I leave you with this thought:
We would not have been the United States of America for 246 years if we allowed fear and shame to prevent our individual rights and freedoms that our guaranteed by the Bills of Rights and the Constitution.
Sunday, April 26, 2020
Friday, April 24, 2020
Part One: Economic Consequences of Government Decisions-What Date Do We Open?
What date do we reopen our state economy? There are economic consequences to any governmental decision. We can see this on a daily basis in Connecticut. Arguments on both sides of the spectrum have been seen with the actions of shutting down Connecticut's economy because of Covid 19 and when and or how it will ever reopen again. And Connecticut is not a surrogate city of New York either contrary to what our Governor wants us to believe.
Another week passes, another week and yet another week of the shutdown with a constant shuffling of dates.of possibly reopening the state Decisions need to be made quickly. Those essential decisions are not being made except for Governor Lamont's complex decree after decree after someone suggests to him to change this or that.
Is this effective leadership and government?
Connecticut even though it has an elected government seems to be relying upon a private sector decision making team for educational decisions and now on how to reopen the economy.
A new team of public officials and others were appointed by Lamont with the task of reopening the economy. I wonder if they are going to be paid? When are they going to meet? Will their meetings be televised? Our taxpayers allowed to voice their opinions to them? Will they have any transparency? The list is long as far as the individuals chosen with various business and health care backgrounds along with several state officials. Do they truly represent a cross section of the state economy? How come there was not someone who recently signed up for unemployment and now has to wait six weeks for their check chosen? How about a small business owner who was shut out of the state program to help them survive during the state mandated shutdown and is on the verge of bankruptcy now? None of those people get chosen. The task force decision should be immediate and with a decisive reopening date. For with every day Connecticut's economy continues in this lockdown our state economic turmoil and road to bankruptcy continues. Bankruptcies will be forthcoming, businesses shut down for good and a massive continuing unemployment with little prospects of finding replacement jobs since who will want to operate a business in this type of state command economy. Taxes for sure will be going up for Fiscal Year 20-21 we can count on it. There has been absolutely no cutting of state management and commissioner salaries at this time. There is no asking state unions to forgo their pay raises effective July 1. There is no shared sacrifice from those in government power making these draconian economic decisions for others who are now fast approaching the point of no economic return and economic failure.
If one looks at Connecticut we can see that certain parts of the state such as Windham and Tolland counties have few cases and deaths from the virus. The economic question is why are they completely shut down? As we see with common sense flu precautions that can be followed that part of our state could be reopened quickly and allow for people to work again and businesses to operate.
The backbone of Connecticut's economy is small business and industry. Politicians really do not understand that especially our Governor. It is gets boring to hear all of the supposed promises that are being made to these small business owners who in many cases are the true risk takers that have made our economy successful since our country was formed. They are now long forgotten in the state due to the elitists who run our state in 2020.
I leave you with this thought:
There is no sound louder than an economic hostage set free from government decree and rule. We have been bullied too long in Connecticut.
Another week passes, another week and yet another week of the shutdown with a constant shuffling of dates.of possibly reopening the state Decisions need to be made quickly. Those essential decisions are not being made except for Governor Lamont's complex decree after decree after someone suggests to him to change this or that.
Is this effective leadership and government?
Connecticut even though it has an elected government seems to be relying upon a private sector decision making team for educational decisions and now on how to reopen the economy.
A new team of public officials and others were appointed by Lamont with the task of reopening the economy. I wonder if they are going to be paid? When are they going to meet? Will their meetings be televised? Our taxpayers allowed to voice their opinions to them? Will they have any transparency? The list is long as far as the individuals chosen with various business and health care backgrounds along with several state officials. Do they truly represent a cross section of the state economy? How come there was not someone who recently signed up for unemployment and now has to wait six weeks for their check chosen? How about a small business owner who was shut out of the state program to help them survive during the state mandated shutdown and is on the verge of bankruptcy now? None of those people get chosen. The task force decision should be immediate and with a decisive reopening date. For with every day Connecticut's economy continues in this lockdown our state economic turmoil and road to bankruptcy continues. Bankruptcies will be forthcoming, businesses shut down for good and a massive continuing unemployment with little prospects of finding replacement jobs since who will want to operate a business in this type of state command economy. Taxes for sure will be going up for Fiscal Year 20-21 we can count on it. There has been absolutely no cutting of state management and commissioner salaries at this time. There is no asking state unions to forgo their pay raises effective July 1. There is no shared sacrifice from those in government power making these draconian economic decisions for others who are now fast approaching the point of no economic return and economic failure.
If one looks at Connecticut we can see that certain parts of the state such as Windham and Tolland counties have few cases and deaths from the virus. The economic question is why are they completely shut down? As we see with common sense flu precautions that can be followed that part of our state could be reopened quickly and allow for people to work again and businesses to operate.
The backbone of Connecticut's economy is small business and industry. Politicians really do not understand that especially our Governor. It is gets boring to hear all of the supposed promises that are being made to these small business owners who in many cases are the true risk takers that have made our economy successful since our country was formed. They are now long forgotten in the state due to the elitists who run our state in 2020.
I leave you with this thought:
There is no sound louder than an economic hostage set free from government decree and rule. We have been bullied too long in Connecticut.
Saturday, April 11, 2020
Easter Covid-19 Thoughts
Happy Easter! One of the holiest days of the year will be this Sunday April 12th. Church services are now online and we are not allowed to worship in person due to Covid-19. Family gatherings for the most part have been cancelled and lives have been turned upside down. Even though we are not allowed to worship in free physical assembly we will still practice in spirit. One must not forget our First Amendment rights of Freedom of Religion and Assembly as stated by the United States Constitution during this crisis.
In writing my columns I try to look at the economic implications of political decisions. I have studied economics and the economy both nationally and world wide since I was in High School. I have taught Economics and Business classes for thirty eight years now and have seen and taught about many economic crises in the classroom during that time frame. A consistent theme that I have seen in these different crises has been the intervention by our government in trying to create a positive outcome to the economic issue. Worldwide free governments also try to do the same. Each time government tries to influence the free market system that we have in our economy we see usually poor results. For those who can remember the "energy crisis" of 1973-74, we saw several different unsuccessful programs implemented to try to end the crisis. The net result of those price controls, limiting how much gas you could buy at one time and the suppression of the normal laws of supply and demand helped to prolong the crisis at that time. We saw a similar problem with the "energy crisis" of 1979-80 also due to government policies. In 2020 we have had little to no supply issues with regards to energy and relatively stable prices with the exception of high electric prices here in Connecticut and California due to these states regulations causing prices to escalate well beyond the national average.
The "housing/mortgage/financial crisis" of 2008-09 was also a similar situation with massive government interventions. Mortgage derivatives were created that bundled mortgages with different rates of return and risk. Our government wanted those who could not afford houses to buy them thus creating buyers programs for that group of people. Poor mortgage decisions were made, housing prices bubbled and the net result was a massive downturn in our economy.
In 2020 we now face another economic crisis due to the Covid-19 virus as our economy has literally been shut down. Connecticut has been especially hard hit with over 300,000 unemployment claims being filed over the past three weeks. With Governor Lamont's new executive order shutting Connecticut down until May 20th now, more claims will be filed. Who will pay for these unemployed workers benefits? Federal monies will pay for some of the claims however it will not be enough. What is the plan to fund these claims?
Businesses that have been ordered shut down by the state have been offered several limited funding plans both on a state and federal level. Some of the bridge loans will be forgiven other loans will have little or no interest charged on them. This is a stop gap measure to keep them operational until they are allowed to open again. The volume of those applying for these loans has overwhelmed the state system and caused delays in the loan process.
For those who pay property taxes in the state they are now offered a 90 day extension to pay them at a 3% rate of interest. It will still be very difficult for businesses to pay property taxes and or any other taxes either with these loans and with no revenues coming in.
There are many other state mandates that will have economic implications in the long run such as delays in rent payments, mortgage payments, loan and tax payments. Connecticut's economy took the longest to supposedly come out of the last recession (and was not fully recovered either) and it will take even longer to come out of this crisis. It will take longer due to the high tax burden that we have in the state along with the massive governmental regulations that has been imposed on businesses here in Connecticut.
Our elected state officials daily tell us of new economic help programs and new regulations that have been imposed on us to stop the spread of Covid-19. Even though it seems like certain parts of our state have not been impacted as much as Fairfield and New Haven counties the entire state must follow these shutdowns. We are also seeing a leveling off of cases and deaths which is great. The question still remains is what and how will Connecticut reopen its economy? Connecticut's economy is valued at roughly $275 billion dollars yearly with a massive state debt to Gross Domestic Product ratio of 19.5%. Connecticut's short and long term debt along with unfunded liabilities is in excess of $140 billion dollars. If more than have of the states businesses close for good due to this crisis our state economy value will drop to roughly $140 billion dollars or less in my opinion. The drop will cause tax revenues to decline, a massive job loss creating high unemployment rates possibly of 20% or more and enormous debt/bankruptcies to occur. In my opinion this is what needs to be addressed immediately through a non partisan non government task force to plan how to open the state's economy as fast as possible and as safely as possible.
State Commissioners and officials have not offered and or discussed any cuts in their salaries and benefits or any cuts in state budgets during this crisis. Connecticut state unions are scheduled to get a 3.5% pay increase on July 1, no word as to suspending this raise due to our economic crisis. I wonder how the state will pay for these raises with a massive loss of tax revenues? I wonder how much the state budget deficit will be for Fiscal year 2019-2020? 2 to 4 billion dollars or more? Is there a concept of shared sacrifice in our state government when it comes to an economic crisis?
I personally do not take lightly the 448 state residents who died as of today (4/11) from Covid-19. Nor do I take lightly the 1200 state residents (including a family member) who died in 2019 from drug overdoses. I also understand the nature of this fast moving virus is different than drug overdoses however I really wonder if Connecticut really had any type of plan for a state wide health emergency like this? Does Connecticut have a plan for a war/nuclear attack type of emergency? Why has Connecticut's Commissioner of Public Health not been in the forefront of this health crisis rather than being unseen, unheard and unquoted? Where is her guidance and leadership in this crisis? Are the statistics being used to report the cases and deaths accurate? Or are they skewed to increase federal funding?
I wonder if Connecticut will have a Commission created to investigate how this health crisis was handled?
Hopefully this health crisis will be over soon. And hopefully one day Connecticut will be a right-to-work state with less or no debt, less state union influence, a two party system that has checks and balances, a state government that is not filled with political nepotism, a state government that follows the state constitution and a vibrant business environment. I just wonder if this will happen in my lifetime?
In writing my columns I try to look at the economic implications of political decisions. I have studied economics and the economy both nationally and world wide since I was in High School. I have taught Economics and Business classes for thirty eight years now and have seen and taught about many economic crises in the classroom during that time frame. A consistent theme that I have seen in these different crises has been the intervention by our government in trying to create a positive outcome to the economic issue. Worldwide free governments also try to do the same. Each time government tries to influence the free market system that we have in our economy we see usually poor results. For those who can remember the "energy crisis" of 1973-74, we saw several different unsuccessful programs implemented to try to end the crisis. The net result of those price controls, limiting how much gas you could buy at one time and the suppression of the normal laws of supply and demand helped to prolong the crisis at that time. We saw a similar problem with the "energy crisis" of 1979-80 also due to government policies. In 2020 we have had little to no supply issues with regards to energy and relatively stable prices with the exception of high electric prices here in Connecticut and California due to these states regulations causing prices to escalate well beyond the national average.
The "housing/mortgage/financial crisis" of 2008-09 was also a similar situation with massive government interventions. Mortgage derivatives were created that bundled mortgages with different rates of return and risk. Our government wanted those who could not afford houses to buy them thus creating buyers programs for that group of people. Poor mortgage decisions were made, housing prices bubbled and the net result was a massive downturn in our economy.
In 2020 we now face another economic crisis due to the Covid-19 virus as our economy has literally been shut down. Connecticut has been especially hard hit with over 300,000 unemployment claims being filed over the past three weeks. With Governor Lamont's new executive order shutting Connecticut down until May 20th now, more claims will be filed. Who will pay for these unemployed workers benefits? Federal monies will pay for some of the claims however it will not be enough. What is the plan to fund these claims?
Businesses that have been ordered shut down by the state have been offered several limited funding plans both on a state and federal level. Some of the bridge loans will be forgiven other loans will have little or no interest charged on them. This is a stop gap measure to keep them operational until they are allowed to open again. The volume of those applying for these loans has overwhelmed the state system and caused delays in the loan process.
For those who pay property taxes in the state they are now offered a 90 day extension to pay them at a 3% rate of interest. It will still be very difficult for businesses to pay property taxes and or any other taxes either with these loans and with no revenues coming in.
There are many other state mandates that will have economic implications in the long run such as delays in rent payments, mortgage payments, loan and tax payments. Connecticut's economy took the longest to supposedly come out of the last recession (and was not fully recovered either) and it will take even longer to come out of this crisis. It will take longer due to the high tax burden that we have in the state along with the massive governmental regulations that has been imposed on businesses here in Connecticut.
Our elected state officials daily tell us of new economic help programs and new regulations that have been imposed on us to stop the spread of Covid-19. Even though it seems like certain parts of our state have not been impacted as much as Fairfield and New Haven counties the entire state must follow these shutdowns. We are also seeing a leveling off of cases and deaths which is great. The question still remains is what and how will Connecticut reopen its economy? Connecticut's economy is valued at roughly $275 billion dollars yearly with a massive state debt to Gross Domestic Product ratio of 19.5%. Connecticut's short and long term debt along with unfunded liabilities is in excess of $140 billion dollars. If more than have of the states businesses close for good due to this crisis our state economy value will drop to roughly $140 billion dollars or less in my opinion. The drop will cause tax revenues to decline, a massive job loss creating high unemployment rates possibly of 20% or more and enormous debt/bankruptcies to occur. In my opinion this is what needs to be addressed immediately through a non partisan non government task force to plan how to open the state's economy as fast as possible and as safely as possible.
State Commissioners and officials have not offered and or discussed any cuts in their salaries and benefits or any cuts in state budgets during this crisis. Connecticut state unions are scheduled to get a 3.5% pay increase on July 1, no word as to suspending this raise due to our economic crisis. I wonder how the state will pay for these raises with a massive loss of tax revenues? I wonder how much the state budget deficit will be for Fiscal year 2019-2020? 2 to 4 billion dollars or more? Is there a concept of shared sacrifice in our state government when it comes to an economic crisis?
I personally do not take lightly the 448 state residents who died as of today (4/11) from Covid-19. Nor do I take lightly the 1200 state residents (including a family member) who died in 2019 from drug overdoses. I also understand the nature of this fast moving virus is different than drug overdoses however I really wonder if Connecticut really had any type of plan for a state wide health emergency like this? Does Connecticut have a plan for a war/nuclear attack type of emergency? Why has Connecticut's Commissioner of Public Health not been in the forefront of this health crisis rather than being unseen, unheard and unquoted? Where is her guidance and leadership in this crisis? Are the statistics being used to report the cases and deaths accurate? Or are they skewed to increase federal funding?
I wonder if Connecticut will have a Commission created to investigate how this health crisis was handled?
Hopefully this health crisis will be over soon. And hopefully one day Connecticut will be a right-to-work state with less or no debt, less state union influence, a two party system that has checks and balances, a state government that is not filled with political nepotism, a state government that follows the state constitution and a vibrant business environment. I just wonder if this will happen in my lifetime?
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