Will the voters buy Malloy's Obama pitch?
It is most fitting that Connecticut Gov. Dannel P. Malloy will speak this evening at 6 p.m. at the Democrat National Convention. He is, after all, an unabashed cheerleader for the president and the Democrat Party, leading a state that is under the party's absolute control. As governor, Malloy has been able to implement the full Democratic playbook.
Malloy has announced that his speech will be short, and commented that he will "beat back the B.S.," i.e. he plans to respond to the message and themes of the Republican National Convention.
As voters listen, they should ask themselves the classic question: are they better off now than they were when President Obama and Malloy were elected? Obama has had a full term, so he should be held fully accountable. Malloy has had only two years and might deserve some benefit of the doubt. However, given their virtually identical policies, can you reach different conclusions?
Even though Malloy is unlikely to deliver a policy address, let's review some of his policies and the president's - particularly their policies on jobs, the electorate's number one concern. Malloy can't avoid this issue, though he might wish to, since recent increases in the national and state unemployment rates have him and his president in hot seats. Malloy's is hotter, because Connecticut's rate now exceeds the national rate.
Spending has increased under both Obama and Malloy, in Malloy's case by about 5 percent in each of his first two years. The state's budget is now almost $21 billion, or about $6,000 per citizen, $24,000 for a family of four.
While both have advocated tax increases, only Malloy has obtained one - a big one. He has raised annual taxes by about $1.5 billion, which will take $6 billion out of the private sector over his full term.
Both have become private sector activists in their attempts to stimulate the economy - despite the fact that neither has any business experience. Obama pumped about a half-billion dollars into solar panel maker Solyndra before it went bankrupt, and Malloy has committed $300 million to a biotech venture, Jackson Labs. Ask yourself, should inexperienced politicians try to pick the industries of the future; if so, should they attempt to pick the winning companies in those industries; if you are still answering in the affirmative, do you think they should make such enormous bets on their choices?
Jackson Labs is also the poster child of Malloy's dramatic jobs-creation policy (Obama's is vague at best). Malloy is extending massive subsidies to business to create jobs. Give Malloy credit for trying, but not for effective implementation. Jackson Labs will directly create only 300 jobs (i.e. $1 million per job).
Jackson Labs is only one instance.
Malloy's signature "First Five/Next Five" subsidies-for-jobs program kicked off with CIGNA, the health insurer, to which Malloy handed $50-$80 million in grants and tax incentives to create 200-800 jobs. Subsequently, Malloy secured a grand total of about 4,000 job commitments from seven companies by dispensing about $90 million in long-term low-interest loans, $90 million in grants and $45 million in tax incentives - to companies including NBC Sports, ESPN and Bridgewater Associates, a huge hedge fund.
Not a lot of jobs for the money, but a lot of money for big corporations that don't need it.
Over the next two years, let's hope these jobs programs have a "multiplier effect" and create "spin-off jobs," improving employment and the overall economic picture in the state. The state certainly needs such improvement. Connecticut has about 165,000 citizens on its unemployment rolls and the state hasn't seen any private sector job growth since Ronald Reagan was president.
According to the U.S. Bureau of Economic Analysis, the state's real GDP ($201 billion in 2011) remains well below its pre-Recession level ($209 billion in 2007). Only six states have worse records.
Ten days ago, Barron's published another ranking, that of the long-term fiscal condition of the states. Connecticut placed dead last with the highest combination of state debt and unfunded pension liabilities as a percent of state GDP - 17.1 percent.
Perhaps Malloy should spend more time addressing Connecticut's dire condition and less "beating back the B.S." The convention may not be the appropriate venue, but he should find one soon.
Red Jahncke heads the Townsend Group, a business consulting firm in Greenwich and is an occasional contributor to The Day.
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