Inspired by Donald Trump’s economic message, union voters in the Midwest and Rust Belt propelled the Republican nominee into the White House this past fall as states like Michigan and Wisconsin went red for the first time in over fifteen years. They did so after years of neglect by the Democratic Party, whose economic and fiscal policies failed to stimulate local and state economies and left union laborers jobless and without a means to provide for their families.
Union turnout for Trump shouldn’t have come as such a shock to Democrats, and their political problems are only about to get worse. Economies in Democrat-controlled states are in serious trouble; major corporations and high-income earners are fleeing rising taxes levied upon them to pay for out of control spending and deficits created by fiscally irresponsible Democratic legislators and governors.
There is no better example of this than Connecticut, where the governor’s mansion and both houses of the state legislature are blue. The state is teetering on the edge of bankruptcy and pension funds are rapidly approaching insolvency.
For decades, Connecticut Democrats in Hartford underfunded teacher pensions and other labor obligations to the tune of hundreds of millions of dollars. They kept kicking the economic can down the road by citing the expected growth their experiment in Keynesian economic theory failed to deliver. That never came, and now the state is facing major deficits.
To make matters worse, Democrats lied to their union base about the rate that return pension funds would garner on an annual basis. Democrats in Hartford knew that those returns – which were at the heart of pension fund contracts — were unrealistic, but lauded them anyway.
Instead of taking this and other serious fiscal issues head on, Governor Malloy decided to pass on state pension debt to local towns and cities, and cut state reimbursement to wealthy towns that did not vote for him. That forces local governments to make the hard decisions, like tax hikes or service cuts, that Malloy refused to make himself. It's no wonder that he’s the nation’s least popular Democratic governor.
This situation is made worse by inept Democratic politicians at the local level who compound the problem by raising taxes and failing to demand action at the state level to address the root of the problem.
Take the town of Fairfield, which has a population of nearly 70,000 residents. The Democratic town executive, First Selectman Michael Tetreau, proposed a 4.5 percent tax increase to make up for his Democratic colleagues’ fiscal mismanagement, and to cover the coming budget shortfalls. The problem with this is that it will increase the financial strain already being felt by working families, and does nothing to address the issues that are the root cause of the deficit in Hartford: underfunded and poorly constructed pension obligations.
Tetreau and other local executives have an obligation to push back against Malloy and force him and the Democrat-controlled state legislature to make the decisions necessary to solve these fiscal problems and ensure future economic stability and growth.
They have failed to do so, and seem content with pushing a political agenda designed to secure their reelection. As a result, the future for union laborers is uncertain, and the deficits will continue to grow.
Democrats would like to push the looming tax burden to corporations, but corporate rates in Connecticut are already too high and companies are beginning to leave. For example, General Electric, a major fortune 500 company and one of Connecticut’s largest employers, moved to neighboring Massachusetts and cost Connecticut millions in tax revenue. As a result, Connecticut was the only state in New England to experience virtually no job growth over the last year.
The fact that corporate tax rates are maxed out almost all but guarantees that future deficits will have to be covered by state income and consumer tax increases, which will only further harm working families and the middle class.
In the end, Democrats’ lies and broken promises to union labor and state voters have produced an untenable economic situation that is nearing crisis stage. Meaningful action and leadership is required now to ensure that states like Connecticut remain solvent and America’s working families and heroes — police officers, firefighters and teachers – have the means to retire. Anything short of that will lead to bankruptcy at the state level.
Democrats should be worried.