Can This State Be Saved?

A Republican budget plan has just passed the state senate—a chamber controlled by Democrats. It’s expected to pass the similarly Democratic house of representatives tomorrow. Is true-blue Connecticut—a state whose speaker of the house works full-time for the American Federation of State, County and Municipal Employees—changing course?

It’s a good night to be at a Republican gala in a town named for the state’s most famous Founding Father, Roger Sherman. Republican national committeewoman Leora Levy—who’s come from Greenwich to cheer on the candidates and carries an elephant-shaped enamel handbag—agrees. “Tonight is an earthquake in Connecticut,” she says. “The only reason those three Democrats switched their votes? They felt pressure from their constituents, who’ve had enough.”

David M. Walker, who sits to Levy’s right, is less sanguine. The former comptroller general of the United States is running for governor. He sees little to celebrate in three crossover votes for a budget that Democratic incumbent Dannel P. Malloy is never going to sign—especially one not radical enough even to begin to correct the state’s downward slide. And sure enough, Malloy vetoed the bipartisan bill two weeks later, making Connecticut the last state in the union without a budget.

These are dark days in the Nutmeg State. Morale is almost as low as real-estate values, which never fully rebounded from the 2008 recession. The state’s economy is contracting, and unfunded public employee pension liabilities have ballooned. Connecticut governors have so far preferred budgetary band-aids to dealing with a deep demographic and commercial hollowing. Historic tax hikes under Malloy spooked many. As the wealthiest residents and biggest corporations flee, the state depends on a smaller cohort of high-income taxpayers every year. The budget battles in Hartford are the beginning of a triage-themed electoral cycle.

Malloy is the nation’s least-popular Democratic governor. (Chris Christie is, unsurprisingly, the least popular of all.) In April, he announced he would not seek reelection. “He could have chosen to run for another term,” says Jon Thompson, spokesman for the Republican Governors Association—for which Connecticut is now a top target. “He chose not to, because his policies were so toxic.” A “red wave” has swept state governments from Maine to Massachusetts since the recession: In all of New England, Democrats govern only Connecticut and Rhode Island, where no-nonsense former treasurer Gina Raimondo has enacted a conservative pension reform.

The Nation’s Watchdog

With his round glasses, ring of white hair, and stolid disinterest in partisan gamesmanship, David Walker, 66, seems a lot like the accountant he is in civilian life.

“We’re bottom five in competitiveness, and one of only eight states that have a declining population,” his Connecticut crowds hear in these pre-primary fundraising days. “The people who are leaving are disproportionately wealthy, disproportionately contributors to philanthropic organizations and to economic growth. The people who are coming are disproportionately interested in our welfare system and our sanctuary cities.”

When he’s not campaigning, Walker works as an adviser for PricewaterhouseCoopers, the big-four accounting firm that gave him his start straight out of college in 1973. At a meet-the-candidate lunch at the Rotary Club of New Canaan, Walker relies on PwC data from a study he coauthored on states’ relative financial ranking: Listeners fall into silence when they learn Connecticut ranks 47th in economic outlook. Ever the auditor, when he spots the Kentucky plates on my rented Kia, he sighs, “Ah, number 49.”

We meet on a sunny Thursday in September. Walker’s traversing Fairfield County in a white Audi sedan with unopened boxes of campaign stationery piled high in the backseat. A handwritten note to a donor can’t hurt, but it’s Connecticut’s fiscal breakdown and his timely credentials that do most of the work for him.

In 1987, Walker went to work for the Reagan administration as assistant secretary of labor for pension and welfare benefit programs. In 1998, he was chosen by Bill Clinton to head the Government Accountability Office, which he restructured and renamed: Before Walker, the “A” was for “accounting.” In the early George W. Bush years, he won favor with Democrats and the press by suing Vice President Dick Cheney—amid popular suspicion of unseemly corporate entanglements—for the minutes of the White House Energy Policy Development Group’s private meetings. Walker likens the suit to a productivity-based pay scale he introduced at GAO to scare career bureaucrats back to work. “If I hadn’t [sued Cheney], believe me, we would have been undercut in our ability to ensure accountability and transparency.”

Walker served as the nation’s top watchdog for 10 years, cutting short the standard 15-year term to become the inaugural head of the Peter G. Peterson Foundation. He left his strictly apolitical post in federal government on a mission he couldn’t accomplish from an auditor’s perch: “To get Congress and the president to make a meaningful down-payment on growing structural deficits.” He helped produce the doom-and-gloomy deficit documentary I.O.U.S.A.—an indie hit in 2008—and wandered the country Cassandra-like, warning citizens about out-of-control spending and our runaway deficit.

“When I was comptroller general, I came with a charge to transform the agency, to turn it around and lead by example,” Walker tells me. “And I did that.” GAO’s sprawl was smaller by a third when he left. Superfluous personnel had been removed or reassigned according to their actual service to the client, namely the Congress of the people of the United States. And with every move he’s made since leaving the agency, Walker’s hoped to persuade elected leaders to be equally responsible.

In 2010, he wrote Comeback America, asking Americans to tell their representatives to give up the debilitating addiction to big government. “It’s still very relevant today,” he tells the Rotarians at lunch, “though the numbers are much worse.” With a tie-in Comeback America Initiative, backed by the likes of Pete Peterson, Ross Perot, and former Wyoming senator Alan Simpson, he toured the nation by bus calling for a new type of thrifty, accountable governance.

He may have traded the bus for an Audi and a seaside house in decaying Bridgeport. But in running for governor of Connecticut, the mission’s the same. “In almost 30 years, Connecticut hasn’t had a CEO that got it right,” he says.

Tax Hikes and Corporate Flight

Connecticut’s traveled a rocky road with Republican governors. Lowell Weicker, a three-term Republican senator, gave Connecticut its first personal income tax with his 1991 post-recession budget. (To be fair, Weicker—who’d lost his Senate reelection bid in 1988—won the governorship as an independent.) And it was a Republican governor, John Rowland (1995-2004), who struck a long-term contract with public sector unions as a quick fix to balance a broken budget. In 1997, Rowland guaranteed unionized state employees’ retirement and health care for 20 years in order to reallocate the hundreds of millions that would have funded their benefits. Weicker and Rowland’s 15 years in the Hartford governor’s mansion dominate any diagnostic analysis of Connecticut’s fall from fiscal grace.

Underfunded state employee pensions are hardly Connecticut’s unique problem, points out Steve Eide, a Manhattan Institute fellow who’s made a case study of Connecticut. The state’s Republicans have not, historically, been “models of fiscal conservatism,” he notes. But when the market crash punctured pension funds for states like Massachusetts and Rhode Island, they enacted structural reforms. Connecticut “resorted to tax increases in the wake of the Great Recession”—becoming so dependent on income-tax revenue that “to lose just a few hundred people, high earners, makes a noticeable difference.” The Rowland contract—extended by Malloy—certainly hasn’t helped, explains University of Connecticut economist Fred Carstensen: “It’s meant union don’t have to negotiate. They have their contract.”

“It was irresponsible,” Walker says of the contract, “and frankly mortgages the future of the state, as well as our young people.” A shrinking demographic as it is: In the last 10 years, the median age in Connecticut has risen, while the population—particularly of those of childbearing age—has decreased.

In 1974, General Electric moved its headquarters from “Drop Dead”-era New York City to Connecticut, joining dozens of Fortune 500 campuses already nestled in clubby coastal Fairfield County, enjoying its low tax burden and top-notch public schools. GE would for decades be the town of Fairfield’s single-largest taxpayer—but the county’s wealth concentrates in Greenwich, commonly called the “Hedge Fund Capital of the World.” In the 1990s, financial-management firms established sizable satellites in Fairfield County towns like Westport and New Canaan, drawing bankers away from Manhattan with lower taxes and a relaxed suburban life within reach of the city.

The expensive exurbs of the Northeast are out of fashion with millennials, who tend to have children later and, when they do settle for the picket fence, favor the metro areas of the warmer—and cheaper—Sun Belt. The highly educated millennials big banks compete to employ, moreover, prefer city living. But the modern distaste for the overpriced bucolic doesn’t account for Fairfield County’s decline: It is the predictable outcome of public-pension mismanagement, unsustainable income-tax hikes, and flagging infrastructure. In other words, it’s Connecticut’s turn to drop dead.

“In 2011, a lot of governors went the conservative route, Republicans and Democrats,” recalls Suzanne Bates, policy director at Hartford’s Yankee Institute for Public Policy. “Revenues were down across the nation, but Dan Malloy said, ‘I’m going to put out a progressive budget. I’m going to spend our way out of this recession.’ ” She blames “the greatest tax increases in state history” for Connecticut’s bleak prospects: a $2.5 billion tax increase in 2011, followed by a $1.3 billion hike four years later. “We’ve only gained back 78 percent of the jobs we lost in the 2008 recession,” and they’re not the high-income ones that fed the growing state government in the early years of the Weicker income tax.

Ahead of the 2015 tax increase, which hit corporate income hard, Connecticut CEOs warned that they’d have no choice but to pack up and leave the former tax haven. GE decamped for Boston in 2016. And in June, the 164-year-old Hartford-based health-insurance giant Aetna made known its plans to relocate, despite Malloy’s pleas, to New York.

Walker recalls to the rapt crowd of New Canaanites his meeting with Aetna CEO Mark Bertolini early this year. “The first thing he said to me was, ‘I cannot afford to die in this state.’ ” If you die within five years of having lived in Connecticut, he adds, the state government claims a chunk of your estate. “And only God knows when you’re going to die.” The pharmaceutical company Alexion announced just after Labor Day that it would be moving its headquarters from New Haven to Boston.

“There’s a sense of entitlement,” explains Suzanne Bates, voicing a common criticism against a state that refuses to trim its excesses. “For a long time Fairfield County has been the gravy train for Connecticut. When the recession hit, that train stopped.” And yet, just this spring, progressive Democrats in the legislature held a hearing on a bill to tax hedge funds’ carried interest at 19 percent—not a vote, just a gesture of “good riddance” to the gravy train, as Bates puts it.

In early summer, Florida governor Rick Scott made a presentation to Connecticut’s bankers, hedgies, and CEOs. Sunny, no-income-tax South Florida has a growing business sector for good reason. Connecticut attorney general George Jepsen explained in a midsummer opinion what Connecticut might have to do to turn back from the brink: unilaterally renege on contractually promised health care, pensions, and state employee pay. “If you want to fix Connecticut,” Bates explains, “you’re going to have to take on the unions in a way that’s scary.”

Jepsen is one of several Connecticut Democrats who’ve dodged what he calls the “misery” of running to succeed Malloy. So far the mayor of Middletown, Dan Drew, lately pegged with an ethics violation, and Bridgeport mayor Joseph Ganim—recently elected to his sixth term after a 10-year sabbatical, most of which was spent in a federal prison—lead a meager half-dozen serious candidates.

On the Republican side, Walker faces his toughest challenge from two mayors who’ve shot for statewide office before: the boyish Tim Herbst of Trumbull, whose voice quivers pubescently when we meet at the Reagan dinner, and Danbury’s Mark Boughton, who believes he can lure Amazon’s new headquarters to Connecticut. Walker, ever the grownup, talks up tax reform to keep job-makers in the state and tells voters dreary things like “the future is not manufacturing.” Asked whether he would pitch Jeff Bezos, he scoffed, “You cannot sell Connecticut with a straight face, not unless you do some of the things I’m talking about.”

The Nerd Connecticut Needs?

“It’s worse than you think it is,” Walker tells the New Canaan audience—and rattles off numbers to back up what they already know: how far Connecticut has fallen. He’s more interested in making this case than panning the opposition, he explains to Amy Wilkinson, who, after a lively question and answer session, sidles up and advises him to attack other candidates’ shortcomings in his speeches. “There are plenty of people running for governor who are good people, and if the state were in good shape, they’d be fine, but the state’s sinking.”

A local financial planner, Bert Bowler, leans over to tell me none of this is news to him. He advises clients to steer clear of Connecticut. “As a practitioner, I cannot in good conscience tell anybody, ‘You should move to Connecticut.’ No way.”

Fairfield-based real-estate mogul William Raveis agrees. He didn’t touch state politics until he met Walker: “Mismanagement from Rowland to Malloy screwed up a great state. Now you can’t not get involved.” Raveis and another local real-estate executive, Bob Scinto, talked Walker into running for governor. Scinto sees his wealthy clients fleeing to Florida and a stagnant market in which, simply, “No one is looking for space.” There were those, even two or three years ago, who dismissed a depressed real-estate market and steepening tax rate as a survivable blip—but no more. “Everyone gets it now,” Scinto says.

Never much of a partisan, Walker was a founding member of the advocacy group No Labels—“Results Over Rhetoric, Ideas Before Ideology” he riffs on their high-minded alliterative taglines—along with former Connecticut senator Joe Lieberman, whom he called for counsel when considering whether to run for Malloy’s job. First, though, he called the former governor of Indiana, Mitch Daniels, who led the Office of Management and Budget while Walker was at GAO. Both voted yea. “Connecticut obviously needs a new one, and he’d be a huge improvement on the status quo,” Daniels says when I ask him whether Walker would be a good governor. “He has all the right instincts and knowledge. We need more people like him running.”

At an evening fundraiser just uphill from his Bridgeport home, Walker stands on a piano bench on the terrace and barnstorms. He’s got a three-point plan to turn around their ship of state: “To restore our cities, we need to be business-friendly, not business-adversarial. That’s day one. But we’ve also got to restore integrity—a word you don’t hear enough from politicians in the state and local governments. We need to toughen conflict of interest laws, and we need to kick convicted felons out of public office.” (Both John Rowland, the former governor, and Bridgeport mayor Joe Ganim have done jail time for corruption.) “They shouldn’t be able to run again!” Walker insists, and the crowd goes wild.

But they haven’t even heard the best part: step three, balance the budget. “Connecticut ratified a constitutional spending cap back in 1992 in order to constrain spending in the face of the new income tax, which provided a new stream of revenue,” Walker says. “But it’s never been operationalized.” With cities Bridgeport, Hartford, and Waterbury lurching toward bankruptcy, he notes: “We’ve got to force these municipalities to restructure their finances.”

Tonight’s hostess is Ashley Sikora, a communications consultant. She restored the 15,000-square-foot Georgian mansion where we’re gathered after it had lain derelict for nearly a decade. “When we moved here, the floors were buckling and there were animals living in the chimneys,” but, even with her husband and his brother and parents sharing the burden, raising three children in a high-tax city in a high-tax state is “really hard.”

She needs Connecticut restored if they’re going to stay. “It’s very difficult to have a passion for a house and have a passion for a city and have a passion for a state, but not know that you can be there securely.” Sikora’s no Republican stalwart but an issue voter, and few of her guests tonight have come purely for party politics. Walker has won their support as an honest accountant in a field of professional politicians and perennial candidates. “We met him down at the local market,” remembers Sikora, “and said, ‘We love your background. What can we do to help?’ ”

A Carpetbagger’s Uphill Climb

Walker has one particularly difficult fight ahead of him. The state that gave us the cotton gin, the submarine, and the Colt .45 did not produce David M. Walker. He was born in Alabama, educated in Florida, and only moved to Bridgeport in 2010. From the crumbling city he calls home and the metropolitan suburbs that fund his campaign’s early steps to the land east of the Connecticut River, where gun rights decide Republican primaries—it’s 169 towns, no county seats, and countless states of mind, united in little more than anxiety about a plummeting economic outlook. But they are all Connecticut.

“My wife and I, we’re not from here,” he admits, as though his Southern accent hadn’t given it away. He and Mary met as college students in Jacksonville and have mostly lived in the suburbs of Washington. “We chose Connecticut, but not having family here, unless things change, it doesn’t make sense for us to stay here. We’ve decided to fight rather than flee.”

Veteran Hartford Courant columnist Kevin Rennie, a conservative who’s covered Connecticut politics for 15 years, isn’t convinced the state needs carpetbagging candidates. He further scoffs at a non-politician’s chances in a very political race. “What’s that got to do with Connecticut?” he asks when I describe Walker’s national deficit hawkery. Every other candidate has a story that ties him to the sinking state.

After the Reagan dinner, driving downcounty through the dark—“It’s beautiful in the daytime, but you can’t see shinola during the night,” Walker says of the winding, wooded highways—we weigh his chances as a Southerner new to electoral politics. “Some of the best governors we’ve ever had,” he says, “some of whom turned out to be presidents, the first job they ever got elected to was governor, and they weren’t born in the state they got elected in.” Look who was honored here tonight!” he adds, exuberantly remembering that son of Illinois who called him to Washington—the two-term reform governor of California who became our 40th president.

The Walkers become more Connecticut every year they see their taxes climb and their house depreciate and balk at the cost of staying—inconceivable, unless a real reformer takes the state’s reins. He’s honest enough to admit it doesn’t have to be him. In 2018, the reach to justify not leaving Connecticut may just define a native.

Alice B. Lloyd is a staff writer at THE WEEKLY STANDARD.