Borrow more money to rescue Connecticut’s lagging economy. That’s the consensus of economists at the Connecticut Center for Economic Analysis, the UConn economic think tank. In other words, here we go again; let’s borrow our way out of this mess.
“CT NewsJunkie reports that in a study that will be released Wednesday researchers found that if the state Bond Commission approved $3.1 billion in borrowing, then it would bring state employment back to its 2010 levels. The numbers would be even higher if some of the borrowing was able to generate federal matching funds for various construction projects and other strategic investments.
“The impact is dramatic: it would increase aggregate employment from 16,000 to 28,000, and double or triple the rate of growth in output,” the report found.
Per usual, the report depends on utopia in order to realize the “benefits” of large and long term borrowing. In fact, the study’s introduction concludes:
“As we have highlighted in past Outlooks - and a plethora of academic studies confirm - long term stimulative strategies depend on and require that expenditures focus
on investments that strengthen competitiveness and provide the foundation for sustaining growth, generating efficiencies and raising productivity, creating amenity benefits to attract employers and employees to the state.”
In other words, the state has to develop a long term blue print and stick to it. When has the government done that? Government has always developed programs on the fly, passing legislation at the 11th hour to appease special interest groups.
The report praises the Malloy administration for bonding money for more projects, but advocates using money already bonded and not utilized on more construction projects. It criticizes the state for not using that bonded money.
What the economists fail to point out is that the state bonds more money than needed, then holds onto it as a budget gimmick. The state does not allocate that bonded money earmarked for projects, instead placing it into the general fund to meet government’s day-to-day obligations, due to cash-flow shortfalls. In the process, the projects are placed on hold.
Throw in the fact Medicaid is placing a huge strain on the budget, leading to annual deficits and you know why Connecticut cannot use all of the bonded money for its intended purposes, as being advocated by the economists.
Of course, these are the same folks who cherished a state income tax, another point overlooked in the report. Connecticut “has the worst record of job creation over the past twenty years,” the report states, while failing to mention the 20-year period coincides with institution of the state income tax.
Borrow more money to rescue the state? Been there. Done that. Unfortunately, this latest “analysis” is nothing more than repackaged pablum.