Corporate Welfare, Economic Development, Economy, Malloy, State Budget, State Deficit Bridgewater Associates, Corporate Welfare, Economic Development, Malloy, Ray Dalio
Don’t let the residue of the Great Recession get you down.
While it is true that America’s middle-class is on the ropes, unemployment remains high, sending a kid to college costs more than most people save in their entire lives, child poverty in Connecticut has gone up 50% in the last decade and the state is facing a $1 billion dollar budget deficit next year, Connecticut’s taxpayers managed to dig deep and find the money to provide one of the world’s biggest hedge fund owners, Ray Dalio, with $115 million in state funds. Meanwhile Stamford’s taxpayers learned this week that they were helping to put the whole deal together thanks to their Mayor’s decision granting a private developer access to some of the most valuable publicly owned waterfront property left in Connecticut.
In return for all this generosity, Dalio, the founder and CEO of Bridgewater Associates, and a man who was paid $3.9 billion last year will move his offices from Westport to a new $750 million office complex on Stamford’s waterfront.
The deal began with Governor Malloy’s decision to give Dalio a taxpayer-funded corporate welfare package that included a $25 million forgivable loan, $5 million in grant funds for job training, $5 million for an alternative energy system and $80 Million in tax credits.
Now, under Part II of the effort, Stamford’s Mayor Mike Pavia has signed a “letter of intent” granting the developer of Stamford’s Harbor Point the right to use city-owned property as part of overall effort to clear the way for Bridgewater Associates’ headquarters.
The mayor’s action will allow the developer to move the South End boatyard to a different location. Never mind that boaters say the alternative site doesn’t accommodate their needs, we’re talking about pleasing a billionaire – and that is billion with a B – so what he wants is what he gets.
Just to make the whole situation as absurd as possible and to add insult to injury, while the letter of intent was signed back in December, it was only made public this week.
According to reports in the Stamford Advocate, “Mayor Michael Pavia said the goal of the document was simply to allow the zoning review process to commence so as to give the city a chance to assess the plan…Pavia said the city has not yet negotiated a price for the land in question. According to the letter of intent, should the boatyard plan be approved by the Zoning Board, the city and BLT [the private developer] will determine the price as part of a final agreement granting the developer property rights.”
Oh, and for those who are into reading the fine print, although initially Mayor Malloy and then Mayor Pavia pledged that no development project would go forward without all of the appropriate approvals, the letter of intent includes special language that reads, “The Applicant shall obtain final approval of such grant by City of Stamford Boards and Commissions as may be required by City Charter, state law or as the Mayor of the City of Stamford, in his sole discretion deems necessary or appropriate.”
The new wording certainly suggests that if Stamford’s various public boards and commissions didn’t act in an appropriately way, the mayor might have to intervene to move the project along without such approvals.
It is nice to note though that when confronted about this latest addition, the Pavia administration claimed that the language is being misunderstood and the letter of intent does nothing more than allow the process to start moving forward.
So here we are.
On the long list of challenges facing Connecticut, we can put a check mark next to the task that reads – “Help the world’s biggest hedge fund and the highest paid CEO in the country pay for a great new office with a great waterfront view.”
More on these latest developments can be found in the Stamford Advocate: http://www.stamfordadvocate.com/news/article/Setting-table-for-Bridgewater-city-paves-the-way-4177724.php#ixzz2HgLY6z9H and http://www.stamfordadvocate.com/news/article/Boatyard-plan-agreement-defended-4184605.php#ixzz2HgLH7Uac
Connecticut State Government, Economic Development, Economy, Layoffs, Malloy Corporate Welfare, Malloy, The Economy, Unemployment
The latest data from the Connecticut Department of Labor reveals that the state is making little progress when it comes to re-bounding from the Great Recession.
According to the more conservative unemployment measurement, 171,100 Connecticut residents are presently unemployed. However, using the federal government’s U-6 rate, which measures both the unemployed and those who are in a part-time job but actively looking for full-time employment, more than 15% of Connecticut’s workforce is without the jobs they need.
In addition, of the 117,500 jobs lost since the “recessionary downturn” began, Connecticut has only recovered about 30,000 jobs (25% of all jobs lost).
Despite the claim that the recovery began in February 2010, Connecticut’s government, financial, construction and manufacturing sectors have yet to even begin regaining jobs.
Still on the downside, Connecticut’s government sector remains down 11,100 jobs, while the number in the financial sector is down 4,200 positions, construction and mining is down 1,200 jobs and manufacturing is down 800 jobs.
Since much of the federal Stimulus Funds were not used to supplement government activity, but instead were used to substitute for existing spending, elected officials have failed to help those who lost their jobs in two of the sectors that leaders could actually have had an impact over – government and construction.
Since Governor Malloy took office, government positions have been further eliminated and despite his predilection for the Financial Sector, his First Five Corporate Welfare Program has yet to have any impact. Although considering those favored business need only create 200 jobs, and have five to ten years to do so, whatever impact the corporate welfare program does have will be limited in nature.
A related problem for Connecticut businesses is that as a result of the lengthy recession, the State of Connecticut has already borrowed more than $635 million from the Federal Government to help pay unemployment benefits. Borrowing was necessary because the amount of funds collected from employee unemployment taxes wasn’t enough to cover the costs associated with payments to the unemployed. Since these funds will need to be paid back, Connecticut businesses will be facing high unemployment taxes on an ongoing basis.
Corporate Welfare, Economic Development, Economy, Malloy, Pelto, Wait What? Corporate Welfare, Malloy, Pelto, Wait What?
An 18-month old company, incorporated in Delaware, with an office in Westport, but its chief financial officer and chief operations officers in California, landed $750,000 in Connecticut taxpayer funding this week, thanks to Connecticut Innovations, a quasi-state agency that works to support the Connecticut economy by investing public funds in private companies.
deets, inc., who has had no sales to date, is developing a “productivity App” that, “facilities message sharing for a specific group of workers, parents of Little League players or other small groups, getting them information cleanly and quickly. It also provides smooth contact synchronization.”
A version of the App is now available at the Apple App Store. According to an article written by the Hartford Courant’s Mara Lee, “The writers of the free app, which has nearly 10,000 users since its launch in August, are hoping to capitalize on the “’anti-social sentiment that’s out there.’”
The company plans to use the new funding to hire 5 employees in Connecticut.
In addition to the Apple version of the app, deets reports that an Android version will be out in January and the plan, according to the Courant, will be to “launch paid versions for businesses. The businesses could use deets to send messages to customers or to help teams communicate internally.”
The news that scarce public funds are being given to a company with limited connections to Connecticut, but who are engaged in an effort to break into a growth field, led Jonathan Pelto, whose blog, Wait, What? seeks to bring transparency and accountability to the Malloy Administration and Connecticut State Government, in general, to consider submitting an application for funding.
“We are definitely considering submitting an application to one of these agencies,” Pelto said, “Attempting to bring transparency to the Malloy Administration is definitely a growth market and we’ve literally had hundreds of thousands of visits to Wait What?,” Pelto noted.
“While our sales have been limited to date, with $750,000 we’d hire, not five, but at least ten Connecticut residents to be researchers and writers, and with that, we’re convinced we could turn the blog into a money-making venture over the next two years,” added Pelto.
However, when asked whether he or his Blog, Wait, What? might be blacklisted from getting state aid, Pelto failed to return multiple phone calls, and referred any further questions to his lawyers.
For the Courant Story see: http://www.courant.com/business/hc-ci-deets-inc-relocation-20121113,0,281750.story
Achievement First/ConnCAN, Bridgeport, Corporate Viewpoint, Corporate Welfare, Economy, Excel Bridgeport Inc., Mayor Bill Finch Bridgeport, Charter Reform, Education Reform, Mayor Bill Finch, Residents for a Better Bridgeport
Bad enough that Bridgeport political and business leaders are trying to reduce the democratic rights of Bridgeport voters, but the next most shocking factor is they are using the people’s money to do it.
In addition to all the time Mayor Finch has dedicated to the effort, a major portion of the money that is paying for all the mailings and television ads have been donated by United Illuminating, Bridgeport Hospital, St. Vincent Medical Center, Aquarion Water Company and Harbor Yard, all entities funded, at least in part, by Bridgeport residents and Connecticut taxpayers.
Add $20,000 from New York Mayor Michael Bloomberg, and Residents For A Better Bridgeport, the political action committee behind the campaign to support Mayor Bill Finch’s power grab to eliminate a democratically elected school board and replace it with one appointed by him, will break all the records when it comes to spending money on behalf of a charter change.
Bridgeport Hospital donated $14,422.90
St. Vincent Medical Center donated $14,400
United Illuminating donated $10,000
Aquarion Water Company donated $14,000
Harbor Yard Sports & Entertainment donated $14,442.90
Think about it…
Bridgeport’s two hospitals that are dedicated to providing emergency and critical care to the people Bridgeport and Fairfield County.
Last year, Bridgeport Hospital provided $13.6 million in care to people who had no health insurance. Add in the bad debts from people who couldn’t pay their full bill, and Bridgeport’s total level of uncompensated care exceeded $41.9 million
Meanwhile, St. Vincent Medical Center provided $9 million in care to those with no health insurance. Add in their bad patient debts and St. Vincent’s total uncompensated care was $41.8 million.
However, apparently they both have the financial resources to make maximum donations to an effort to undermine democracy in the city that they call home.
And yet, every year, these two hospitals beg the Governor and General Assembly for financial support to stay in business.
So how do these hospitals stay in business?
The State of Connecticut provides these hospitals with major subsidies, using taxpayer funds.
Meanwhile, storm or no storm, UI can find an extra $10,000, the regional water company $14,000 and the publicly funded Harbor Yard can find just over $14,400. All receive direct funding from taxpayers, rate payers, tax breaks or money from the hard working families of the region.
But without your knowledge or support, some of these funds are being diverted from providing services to paying for Mayor Finch’s immoral political power grab.
Of course, when it comes to using scarce resources, corporate executives, like those at the two hospitals Bridgeport hospitals find other favorite ways to spend your money:
Bridgeport Hospital: Total salary and compensation for top corporate executives
President/CEO William Jennings: $764,770
Senior Vice President of Finance/CFO $688,999
Senior VP of Human Resources $468,241
Senior VP/COO $458,001
Vice President $452,611
St. Vincent Medical Center: Total salary and compensation for top corporate executives
President/CEO Susan David $1,484,755
Senior VP of Finance/CFO $567,478
Senior VP $ $456,215
Vice President $455,920
So next time you pay your taxes, or write out your health insurance premium payment, or pay your water bill or simply try to come up with the money to take your kids to an entertainment event, remember just where some of that money is going.
And it’s not like there is no one who could step in and stop this madness.
All of these organizations have Boards of Trustees or executive leadership teams who could be speaking out for the people of the region…but they aren’t.
Bridgeport Hospital Board of Trustees:
Emily E. Blair
Gayle L. Capozzalo
George P. Carter
Robert S. Folman
Richard M. Freedman
Janet M. Hansen
Richard M. Hoyt
William G. Hulcher
Peter F. Hurst
William M. Jennings
Newman Marsilius, III
Patricia L. McDermott
Ronald B. Noren
Jeffrey P. Pino
Meredith B. Reuben
Howard L. Taubin
St. Vincent Medical Center Board of Trustees
Sr. Martha Beaudoin
Susan L. Davis
Edward T. Grossman
Sr. Maura Hobart
United Illuminating Board of Directors
Thelma R. Albright
Arnold L. Chase
Suedeen G. Kelly
John L. Lahey
Daniel J. Miglio
William F. Murdy
Donald R. Shassian
James P. Torgerson
Aquarion Water Company Executives
Charles V. Firlotte , President and Chief Executive Officer
Donald J. Morrissey, Chief Financial Officer and Corporate Secretary
Howard J. Dunn, Vice President, Operations – Aquarion Company
Bruce T. Silverstone, Vice President, Corporate Communications
Doug Kniffin, Vice President and Chief Information Officer
Here are just a few of the companies and organizations that are funding the anti-democracy campaign. More names to come…
|Aquarium Water Company:
|AT&T Connecticut Employee PAC
|Benchmark Trademark Ltd
|Bradford Evans (Senior Advisor Morgan Stanley)
|Bismark Construction Company
|Bridgeport and Port Jefferson Company
|Charles Valentino, State Marshall
|CT Coalition for Advancement Now (ConnAD)
|Hal Rosnick (Attorney)
|Harbor Yard Sports and Entertainment LLC
|Jarvis Group LLC, NY (in-kind video)
|Juda Epstein (Attorney)
|Michael Bloomberg, Mayor of New York City
|Michael Halperin, Washington, CT
|Poko Core Builders, Farmington, CT
|Pullman & Comley (law firm with significant state business)
|St. Vincent’s Hospital
|Steven Simmons, Greenwich, CT
|WC & F Real Estate and Development
|Zachary Zeitlin (Silver Point Capital, Westport)
|2 Dog Media (in-kind web design)
|*The Latest from the CT Post can be found here:http://www.ctpost.com/default/article/Ed-board-charter-change-divides-voters-4007166.php
Economy, Malloy, Obama, Pelto
Barack Obama’s speech to the Democratic National Convention, last night, was impressive, (as one would expect.)
The President’s passion, dedication and commitment to putting the country on track were evident, and he provided a sense of hope that a Second term would see a true re-commitment to the ideal that got him elected four years ago.
For many of us, it is that sense of hope that will lead us back to the polls to vote for him in November.
The President’s speech also brought me back to a commentary piece I wrote for the Hartford Courant in April 2008 that was titled “Bitter? You Bet.”
At the time, the Democratic Party nomination process was headed into the all-important Pennsylvania primary. At an event, candidate Obama was quoted as saying that some people in Pennsylvania (and elsewhere in the country) were bitter.
Establishment politicians and the media went nuts.
The New York Times reported, “The remarks touched off a torrent of criticism from Mrs. Clinton, Mr. McCain and Republican activists and party officials, all accusing Mr. Obama of elitism and belittling the working class.”
Time Magazine led with an article entitled, “Will Obama Pay for ‘Bitter’ Flap?” The piece observed, “After the last few days he has endured over his controversial comments about ”bitter” small-town America , Barack Obama can only hope that the Pope’s arrival in Washington on Tuesday steals some of the spotlight. But given the hits he took from both the Clinton and McCain campaigns over his questionable choice of words, that may be too much of a miracle to ask for.”
Obama’s response was, “No, I’m in touch…I know exactly what’s going on. I know what’s going on in Pennsylvania, I know what’s going on in Indiana, I know what’s going on in Illinois. People are fed up, they’re angry, they’re frustrated, they’re bitter and they want to see a change in Washington. That’s why I’m running for president of the United States of America.”
But among political pundits, there was serious discussion as to whether Obama “bitter” comment might have derailed his campaign. His own team was backtracking, saying Obama meant to use the word frustrated, not bitter.
Although a supporter of Hillary Clinton, a week later, I wrote a commentary piece for Sunday’s Hartford Courant.
Bitter? You Bet, started out with the statement that, “Our Political Leaders Seem Unable to Grasp, Let Alone Solve, The Economic Problems Confronting Connecticut and the Nation.”
“Although I can’t speak for the small-town people of Pennsylvania, I can certainly report that as far as I’m concerned, I’m bitter and getting more bitter by the day.
In fact, as a middle-income American, I’m not only bitter, I’m angry and disappointed as well. Political pandering, mediocrity and incompetence on the national and state levels are undermining many of the fundamental values that we middle-income Americans hold dear, while threatening the economic vitality and viability of our country and our state and undermining the economic health of many of our families.
The damage from failed leadership is evident throughout the political process and across the political spectrum. Perhaps most clearly of all, it can be seen right here in Connecticut, where our state is losing its competitive edge while our leaders are unable or unwilling to confront the challenges of the 21st century.”
I then outlined the reality of Connecticut’s failed economic development policies and the fact that, “although it’s true that some of Connecticut’s wealthiest families have done just fine over the past decade and a half, the level of income inequality between Connecticut’s top- and middle-income families, as well as the income disparity between Connecticut’s top and bottom families, increased more than in any other state in the country.”
And I concluded with the observation that, “it is hard to imagine anything more troubling than the state’s decision to saddle our state, our taxpayers and our children with an extraordinary level of irresponsible and crippling state debt….Excessive borrowing and the failure to set aside sufficient funds to pay for future costs associated with state employee and teacher pensions, as well as health and retirement benefits, means that a future bill of unimaginable proportions awaits us all.”
I ended my piece with the observation that , “Regardless of what Sen. Obama really meant by his recent comments, it strikes me as quite obvious that many families, lower- and middle-income alike, are undoubtedly bitter.
Here we are, four years later.
We have a Democratic President and a Democratic Governor.
We have a right-wing Republican Party that will do and say anything to undermine the President’s ability to get things done.
And we also have a Democratic Party that is generally timid and meek, unwilling to truly challenge the status quo.
Listening to President Obama, I was reminded, again, just how far short our leaders have fallen from their promised goals.
That said, listening to President Obama’s speech, I was also reminded why the choice to vote for Obama over Romney is such an easy one.
I am bitter. In fact, I’m even more bitter than I was in 2008.
But last night, Barack Obama proved, yet again, that he truly understands what needs to happen in the country, and I’m banking on the hope and belief that, in a second term, he will fight even harder for those beliefs and policies.
The alternative is to vote for Romney and that ensures that we will be going in the completely wrong direction.
My full 2008 Hartford Courant commentary piece can be found by clicking the links above or here: http://articles.courant.com/2008-04-20/news/commentarypelto0420.art_1_connecticut-economy-connecticut-economic-resources-center-job-growth
Bridgeport, Corporate Viewpoint, Corporate Welfare, Economic Development, Economy, Malloy, Mayor Bill Finch, State Budget, Taxes Bass Pro, Bridgeport, Carbela's, Corporate Welfare, Malloy, Mayor Bill Finch
The concept that Connecticut taxpayers need to pay the world’s biggest hedge fund $115 million dollars to stay in Connecticut is, understandably, a hard thing to truly understand. They managed to pay their CEO $3.9 billion last year and we have to cough up $115, or they’ll move?
But of course, Bridgewater is not the only private corporation that taxpayers are subsidizing.
In fact, while cuts are being made to vital services, more and more companies are demanding what is, in essence, a ransom. If we taxpayers don’t pay the ransom, they won’t relocate to Connecticut, or even worse, they’ll leave and take their jobs with them.
Take, for example, the situation that occurred two months ago, when on Sunday, July 8, 2012, more than 400 people joined Governor Dannel Malloy, Mayor Bill Finch, Johnny Morris, the founder of Bass Pro Shops and a “host of outdoors celebrities from the world of fishing, bullriding and NASCAR,” for a press conference at Bridgeport’s Steelpointe Harbor industrial site.
The event was to announce that Pro Bass will build a 150,000 square-foot store, a store that will serve as the anchor tenant of Bridgeport’s plan to develop the now vacant Steelpointe area.
According to press reports, the agreement was the product of nearly a year of negotiations between the State, the City and Bass Pro Shops. The full subsidy package remains vague, but according to the Malloy Administration, the project “is expected to generate at least 250-300 jobs.”
Governor Malloy proudly proclaimed, “This is about jobs, and its great news for the City of Bridgeport…Bass Pro will be a draw for people from throughout the region, one that will help revive the local economy.”
And Mayor Bill Finch added, “Today’s announcement marks a historic moment for the City of Bridgeport and Steelpointe Harbor. Bass Pro Shops’ investment in Bridgeport will create hundreds of jobs, generate new tax revenues and bring economic growth to the City. They are a proven brand that will generate interest and attract customers from throughout the region. Bass Pro Shops is committed to Bridgeport and we are proud to have them as a major anchor tenant at Steelpointe Harbor.”
On behalf of the business community, Joe McGee, vice president of public policy with the Business Council of Fairfield County, and a former commissioner of the Connecticut Development Authority (the state agency responsible for attracting business to the state) said, “Bass Pro is not just a Bridgeport opportunity. It’s a regional opportunity. A Bass Pro competitor — Cabela’s — continues to enjoy significant success at the other end of the state in East Hartford several years after opening.”
For the politicians and business leaders in attendance, the day could not have gone better.
So what about the Cabela’s story:
Six years ago, almost to the day, a different Connecticut governor and a different major outdoor retailer held a similar press conference. Governor M. Jodi Rell, the Mayor of East Hartford and the corporate leadership of United Technologies Corporation and Cabela’s, held a press conference at East Hartford’s Rentschler Field to announce an agreement that Cabela’s would build a 200,000-square-foot “superstore,” its first store in New England.
The onlookers were told that Cabela’s is “a significant cash generator” and the new store at Rentschler would “benefit the Hartford area.”
In Cabela’s situation, the Connecticut Development Authority wooed Cabela’s with a $10 million incentive package for the company and another $12 million to build roads and make other infrastructure improvements on the site. To sweeten the deal, East Hartford’s Town Council approved a ten-year tax abatement plan that would save Cabela’s $6.7 million in property tax payments.
As with Bridgeport’s Steelpointe Harbor site, The Rentschler Field plan was looking to Cabela’s to be the anchor tenant for a $2 billion development that would include stores, hotels, offices and high-tech companies. A study conducted by the University of Connecticut predicted that the Rentschler Field project would create 6,000 to 8,000 jobs and generate $40 million in state revenue and $57 million in local taxes, every year.
It wasn’t long before officials had to admit that, “The presence of Cabela’s, considered a retail super magnet, hasn’t been enough to persuade companies and developers to invest money at Rentschler.”
By the beginning of 2009, East Hartford Mayor Melody Curry was quoted as saying “I think we were expecting to see more growth and development than we’ve seen so far.”
Now, six years after the State of Connecticut and East Hartford “invested” nearly $32 million in public funds to attract Cabela’s, there is no sign of the projected $40 million, a year, in state revenue, nor is East Hartford getting its $57 million. In fact, after letting Cabela’s keep nearly $7 million in what would have been their share of local property taxes, in about 2016, Cabela’s will finally start paying East Hartford about $750,000 a year in real estate taxes. At that rate the taxpayers of East Hartford won’t even recoup their investment until 2026.
The question arises, if Connecticut’s taxpayers got burned in 2006, why did Governor Malloy and Mayor Finch engage in the very same strategy in 2012?
Was the 2006 experience just bad luck?
The answer can be found in an investigative report conducted by the Franklin Center for Government and Public Integrity, a non-partisan, independent watch-dog group outside of Washington D.C.
The Franklin Center found that Bass Pro shops and Cabela’s “received or are promised more than $2.2 billion from American taxpayers” over the past 15 years.
The study found that, “The stores are billed as job generators by both companies when they are fishing for development dollars. But the firms’ economic benefits are minimal and costs to taxpayers are great.”
The researchers noted, with some irony, that, “the amount of tax dollars that have been poured into these two companies would be enough to purchase every man, woman and child in the United States their own fishing pole.”
The Franklin Center report, released in August, found that:
- “Cabela’s has received $551 million in local and state assistance during the past 15 years.
- Bass Pro Shops received $1.3 billion in local and state assistance during the same period.
- The federal government helped ensure liquidity for Cabela’s’ credit card division by providing $400 million in financing for the purchase of the company’s securitized debt.
- Both firms have a history of targeting rural or smaller suburban communities and negotiating deals that involve extensive borrowing on the part of the municipality to build a store.
- In fact, Bass Pro Shops often pays comparably little toward the construction of its own stores. While this sometimes is the case with Cabela’s, its development schemes tend to involve elaborate agreements that include massive outlays for public spectacles in the midst of the retail setting.”
According to the report, Stacy Mitchell, author of Big Box Swindle, said that Cabela’s and Bass Pro always seek to convince elected officials that the store will be a major tourist attraction.
And even as Connecticut and Bridgeport were signing on the dotted line, it turns out the Franklin Center had discovered that, at least Cabela’s, has “begun to rethink its strategy, which has reaped it hundreds of millions of dollars in incentives.” According to a top Cabela’s corporate official, “We have come to the conclusion that the places that are most likely to offer incentives are the places we are least likely to want to build.”
And as to the claim that the new Bass Pro will lead to jobs for Bridgeport residents, an investigative report by Brian Lockhart, a Connecticut reporter for the Connecticut Post and Hearst newspapers, discovered that both the Malloy Administration and the Finch Administration knew, but did not reveal, that Bass Pro was facing allegations that, “the company since at least November 2005 has denied qualified blacks and Hispanics retail positions.”
As the Federal Government’s lead attorney wrote, “Our investigation lasted over two years…(there was) a pattern or practice of discrimination…going on at virtually all Bass Pro stores across the country.”
So, despite knowing that the promised economic nirvana that would come with helping build a Cabela’s in East Hartford never occurred and that Bass Pro was facing discrimination charges for refusing to hire blanks and Hispanics, Governor Malloy and Mayor Finch told the assembled on July 8th of this year, “Bass Pro Shops’ investment in Bridgeport will create hundreds of jobs, generate new tax revenues and bring economic growth to the City.”
And on top of that, we still don’t know what Malloy and Finch promised Bass Pro in order to get them to say they’d build a new store in Bridgeport.
Economic Development, Economy, Poverty Economic Development, Economy
One of yesterday’s Wait, What? Blog posts dealt with the reality that, here in Connecticut, we taxpayers are giving the world’s largest hedge fund, $115 million dollars to stay and expand in Connecticut. The public subsidy will cost us about $150,000 for each of the 800 jobs they are scheduled to create over the next ten years.
Meanwhile, as a member of the dwindling middle class, it will cost me, after the available public subsidies, about $160,000 to pay for my child to get an undergraduate degree in her chosen field.
We are witnessing modern capitalism in which taxpayers are giving money to a company that paid its CEO $3.9 billion last year while a person making an income at about the state average builds up a debt that drag me down for the rest of my life.
And we are told that things are getting better.
Things might very well be getting better, but that misses the point.
Today, Connecticut Voices has released a report that drives the point home in way that everyone, across the political spectrum will be able to understand.
Entitled, The State of Working Connecticut 2012: Employment, Jobs and Wages in the Wake of the Great Recession,” the report reveals that “the wage gap between the wealthy and others has grown over the recent economic recession and recovery, with the highest wage workers enjoying wage growth four times that of median wage workers, while wages stagnated for low wage workers…”
The report examines the period from 2006 – 2011 and key findings include:
- “The gap between Connecticut’s wealthy residents and everyone else has continued to widen. Connecticut’s median wage grew by only 2.4 percent (after adjusting for inflation) over the lowest paid workers actually saw their wages fall by 0.2 percent.
- “Connecticut’s higher paying manufacturing jobs are disappearing and being replaced by lower paying jobs in healthcare, hotels, and restaurants.” 14 percent of Connecticut manufacturing were lost between 2006 and 2011, while healthcare and social service sector jobs grew by 11 percent.“ The Problem: Healthcare and Social service jobs pay “78 percent of the statewide average weekly wage,” meaning those that are getting jobs are getting them in fields that won’t allow those workers to even reach Connecticut’s existing middle ground.
- “Connecticut’s Black and Hispanic workers have not experienced an economic recovery.”
- “Connecticut’s youngest workers are most likely to be unemployed, but Connecticut’s oldest workers are most likely to face long-term unemployment.” As of 2011, almost in one in five younger workers were officially unemployed. Meanwhile, of the unemployed workers 55 or over, a shocking six in every ten have been unemployed for more than 26 weeks. Losing a job when you are 55 or over is becoming a death sentence when it comes to ever finding work again.
This study should be mandatory reading for every legislative candidate seeking office. In fact, perhaps some Wait, What? readers could print off the executive summary or full report, send it to your local legislative candidates and ask, no demand that they provide the voters with some substantive response.
The Executive Summary is here: http://www.ctvoices.org/sites/default/files/econ12sowctes.pdf
The Full Report is here: http://www.ctvoices.org/sites/default/files/econ12sowctfull.pdf
Corporate Welfare, Economic Development, Economy, Education Reform, Malloy College Education, Corporate Tax Breaks, Malloy, The Economy
File this one under: Speaking out for a dying breed – The American Middle Class
August 29, 2012
Having completed the task of dropping my child off at college, I’m reminded of the challenge that faces our chief elected officials, whether in Washington, or here at home in Connecticut.
In particular, as the effects of the Great Recession continue to take its toll on the nation; those of us in the trenches are left to ponder about what is the proper balance when it comes to using public resources to create quality jobs versus creating quality workers.
In one of my old college economic textbooks, I found a definition of a public subsidy as, “the provision of economic value by a public entity to a private entity for purposes beneficial to the public…”
That is, government, on behalf of the people, spends money, not to purchase goods and services, but to induce actions that have a longer-term benefit for society.
It might be providing grants, loans, or tax benefits to businesses to get them to maintain or expand the number of quality jobs they provide.
On the other hand, it might be providing grants, loans, or tax benefits to individuals, so they can go to college and have better, more productive lives and become part of a quality workforce that allows our economy to be successful.
Like many middle-class families, paying for college has eclipsed the challenge of buying and maintaining a home. Earlier this summer, I once again signed the federal government’s Parent Plus Loan promissory note to borrow $30,000 (at 5.9 percent); an amount the government formula said was my “share” of the bill. Grants and subsidized loans covered the rest.
At this point, it looks like I’ll need to borrow about $120,000 for the undergraduate degree. With interest, the total cost over ten years will be $159,000,000, just over $39,000 of which will be interest on the loan.
At about the same time, Connecticut’s governor signed a “promissory note” on behalf of Connecticut’s taxpayers to pay the world’s largest hedge fund, Bridgewater, $115,000,000. Although Bridgewater had enough money to pay its CEO $3.9 billion last year, making him the highest paid employee in the world, apparently the public funds were needed to persuade Bridgewater to stay in Connecticut, build a new headquarters and add 800 new jobs over the next ten years.
The public subsidy included a ten-year, $25 million forgivable loan, with an interest rate of one percent, $5 million in grant funds for job training, $5 million for an alternative energy system, and $80 million in Tax Credits.
If Bridgewater fails to create the 800 new jobs over the next decade, it will have to repay the $25 million dollar loan, but will be allowed to keep the other $90 million in public subsidies. The one percent interest rate on that $25 million loan means the company would have to pay about $1.3 million dollars in interest.
In the end, when you calculate the numbers, it really means that as a middle class family, I pay a carrying cost of 26 percent to get the funds I need while the world’s biggest hedge fund pays a carrying cost of 5 percent.
Or put a different way, to create that quality job, Connecticut’s taxpayers are giving Bridgewater about $150,000 per job, while I’m paying (after the various public subsidies) about $160,000 to help “create” a quality worker.
Truth be told, I’ve given up trying to figure out the fairness in all this, but as part of the ever-shrinking middle class, the modern phrase, “I’m just saying,” seems particularly appropriate.
I’m just saying…
Corporate Viewpoint, Economic Development, Economy, Malloy, State Budget, Taxes Bridgewater, Economic Development, Malloy
Connecticut taxpayers are providing $115 million in aid to the world’s largest hedge fund.
Ray Dalio, the company’s founder and CEO is the highest paid person in the country. (He made $3.9 billion in 2011 alone.)
The package is, “an incentive to stay and expand in the state.”
They build a $750 million headquarters in Stamford (they are now based in Westport)
They increase their workforce from 1,225 to 2,000 over the next decade.
Apparently it is a win, win situation.
According to an article in Slate.com, “without Connecticut’s cash, places like New York’s Westchester County, New York City and even parts of New Jersey might have lured Bridgewater with incentives of their own. The firm needs to move somewhere, Westchester isn’t that much further away from its current Westport home, and many employees anyway reverse-commute from Manhattan.”
So apparently, we had no choice. We had to give Bridgewater $115,000,000.
The taxpayer-funded package includes a $25 million forgivable loan, at a 1 percent rate for 10 years, $5 million in grant funds for job training, $5 million for an alternative energy system, and $80 Million in Tax Credits. That means that state revenue drop by $80 million and Bridgewater’s profits go up $80 million.
A recent Hartford Courant editorial endorsed Governor Malloy’s action, with a headline that read, “Bridgewater Deal: Hold your nose and help the hedge fund.”
Why? Because hedge fund billionaires create jobs…
In fact, 800 to 1,000 new jobs over the next 10 years. That is, he needs to create those jobs in order to have the $25 million forgivable loan, forgiven. Apparently he keeps the other $90 million regardless.
The jobs are phased in over the next ten years and if each employee makes at least $150,000, per year, Connecticut picks up an additional $10,000 or so, per employee, per year, in state income taxes.
Putting aside the “extraordinary spin-offs” that are also promised, Connecticut’s taxpayers will be able to recoup their “investment” in Bridgewater sometime between 2031 and 2036.
Meanwhile, budget deficits continue to take their toll on vital services. For example, last year Governor Malloy instituted the deepest cuts in state history to Connecticut’s public colleges and universities and Connecticut’s education funding formula remains somewhere between $800 million and $1.5 billion underfunded.
The biggest hedge fund in the world picks up over a hundred million dollars. The highest paid person in the country makes more money and Connecticut ends up with fewer college graduates and a less educated workforce.
Oh, and every hedge fund in Fairfield Country, and there are many, knows that all they have to do is go in to see the Governor and tell him they are thinking of moving to Westchester County, but if Connecticut’s taxpayers cough up at least $100,000 for every employee that they presently have, they’ll stick around for a decade and even promise to add some jobs.
And to all this, the Hartford Courant concludes, “plus, if you buy the theory that inventive people spur the economy, Mr. Dalio is at the head of the creative class, an iconoclastic leader and thinker. So though it may not sit well, the deal may make sense.”
Finally, as one Connecticut business magazine wrote, “there can be no doubt that Gov. Dannel Malloy wanted Bridgewater Associates as part of his extended “First Five” program. He courted the company while attending a global economic forum in Davos, Switzerland, earlier this year. He sought to fulfill Bridgewater’s desire to expand by targeting prime property along the water’s edge. And on Aug. 15 he enthusiastically announced that Bridgewater would become eighth participant in the state’s economic development program that provides lucrative financial incentives to Connecticut-based businesses in exchange for job creation.”
While company officials had considered “a variety of different options” for relocating its headquarters, direct access to the water was a strong drawing card for the Stamford site, said the Bridgewater spokesperson. The city was selected for “a variety of reasons, but mainly what was very attractive was the potential to develop a site along the waterfront was great. What’s good about this is restoring a piece of waterfront property.” The spokesperson also cited Stamford’s proximity to mass transit and what he called “a thriving area close to New York City” as pluses.”
For more about the deal here are a few other news articles:
Budget Cuts, Economy, Education Reform, Layoffs, Malloy Budget cuts, Malloy, President Obama, Unemployment
On Thursday, Connecticut’s Department of Labor released their monthly report on the state of the economy. The data revealed that the percent of unemployed had risen from 8.1 percent in June to 8.5 percent in July. In response, Governor Malloy said he was “skeptical” of the report’s accuracy.
Meanwhile, on Friday, the Obama Administration released a report showing that at least 300,000 teaching jobs have been lost in the last three years. Obama called for new investment in education spending.
The nation’s “official” unemployment rate stands at about 8.3 percent. That means that the true unemployment rate in the United States is at least 15 percent.
Although the media traditionally reports on what is called the “U-3” unemployment rate, a far better measure is one called the “U-6” rate. The “U-6” unemployment rate, which is released at the same time as the lower number, includes the traditional definition of the “unemployed,” but also adds-in those people who are employed in part-time jobs, despite the fact that they are actively looking for full-time work.
While having a part-time job helps some families make ends meet, an honest definition of being unemployed must include those who can’t find the full-time job they need and, instead, are forced to fall back on some type of part-time employment.
Since Connecticut’s numbers are similar to the national numbers, we can safely assume that at least 15% of Connecticut residents continue to find themselves without the work they want and need.
If the truth be told, the notion that the “official” unemployment rate is 8.1 percent or 8.5 percent is, quite frankly, irrelevant.
The very real impact federal, state and local budget cuts have on the economy and our education system becomes clear when we understand that since President Obama took office, the number of Connecticut residents employed in federal, state and local government jobs has dropped from 251,200 to 235,000.
This means that in just the last four years, there are 16,000 few jobs in schools and other government positions around the state.
Of that number, the overwhelming majority, 10,000 jobs, have been lost just since Malloy became Connecticut’s governor.
Last month, President Obama said, “think about what that means for our country. At a time when the rest of the world is racing to out-educate America, these cuts force our kids into crowded classrooms, cancel programs for preschoolers and kindergarteners, and shorten the school week and the school year. That’s the opposite of what we should be doing as a country.”
Today, the President used his weekly address to talk about the loss of teaching jobs, while reiterating his pledge to invest an additional $25 billion to prevent layoffs and strengthen public education around the country.
The sad truth is that regardless of whether the President is calling for more of an investment in education or the Governor is skeptical that the unemployment is going up when “feels” it should be going down, the fact is, Connecticut’s children are returning to school in a couple of weeks with far few teachers and support staff.
That is bad news for unemployed teachers, our children and our entire society.