The news last week provoked an uneasy mixture of disgust and resignation. Only weeks after the General Assembly passed a budget that included lay-offs of state employees and cuts in services, the state Bond Commission approved $22 million in loans and grants for the world’s largest hedge fund whose chief is ranked ninth on the Forbes 2016 list of hedge fund managers.
The news made a lot of good people — left and right — feel sick. In light of the parsimony at the Capitol, my colleague Sarah Darer Littman called the corporate aid package “a stunning display of let-them-eat-cakery.” From the right, a scathing editorial in the Republican-American thundered against such crony capitalism: “If buying jobs is the basis for a state’s economic strategy, the state is fundamentally uncompetitive.”
No less than Gov. Dannel P. Malloy, who noted that Bridgewater was threatening to move to Westchester County, N.Y., himself lamented that, “It would be wonderful if states didn’t compete using dollars. I would be the first governor to join that effort.”
Be that as it may, the practice of bribing companies to come to Connecticut or stay here has been going on for as long as anyone can remember. This latest episode comes four years after an ill-fated $115 million deal in which Bridgewater would have simply moved its headquarters to Stamford from Westport, in exchange for promises to create more jobs.
Malloy’s so-called First Five program has benefitted lots of corporations. According to the Department of Economic and Community Development, over the last three years the program, which is scheduled to end this year, has provided $256 million to 13 different companies. A partial list of those who have benefitted over the years: CIGNA, UBS, ESPN, NBC, and TicketNetwork.
The strategy was summed up bluntly and succinctly in a Wall Street Journal editorial this week entitled “Connecticut’s Hedge-Fund Bribe.” The gist: tax the rich at the highest rates you can get away with and then when too many of them threaten to leave, start buying them off. Ouch!
Thankfully, not everyone in state government is happy with the Bridgewater deal. The state Bond Commission approved it, but two members — state Comptroller Kevin Lembo, a Democrat, and state Rep. Chris Davis, R-Ellington — questioned the wisdom of spending that kind of money on a firm that manages about $130 billion in assets. Lembo went to the trouble of posting a substantial press release outlining his concerns.
For those of us who have been advocates of open government and fiscal honesty, Lembo has long been something of a hero. Since winning election in 2010, he has launched several transparency initiatives, most with the prefix “Open.” Open Budget allows taxpayers to track how their dollars are spent — and it’s searchable right down to the line item. Open Connecticut allows users to export the data and perform their own analysis on it. And he has been a persistent thorn in Malloy’s side, attempting at every turn to set the record straight on the size of the state’s chronic budget deficits.
But Lembo really outdid himself when he championed legislation that would have required the state to maintain an online database of taxpayer funded economic development efforts of the sort lavished on Bridgwater. The legislation passed the House unanimously but much to Lembo’s dismay (and mine), the bill died in the Senate. With a straight face, leaders there cited a lack of time and urgency, and lukewarm support from Malloy.
Now there is talk that Lembo might run for governor in 2018. If so, he would not run as Malloy’s man. Contrary to a suggestion floated by Malloy late last year, I really don’t think the governor will run for re-election. If Hillary Clinton finds herself in the White House again next year, Malloy, an early supporter of hers who chairs the Democratic Governors Association, will almost certainly be offered a cabinet post — probably transportation.
That means he would be succeeded by Lt. Gov. Nancy Wyman. If I were a Democrat, I know who I would vote for. Wyman, 70, would be more of the same. Lembo might shake things up. Look for a Scarborough-Lembo race in 2018. But neither will win the endorsement of President Trump. There, painful as it was, I said it.
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