Michigan's Governor Granholm has no clue
Michigan state legislature has avoided another shutdown of the state
government by passing a budget resolution that gives them another
month to craft a budget that meets the needs of the state. The
Republicans are holding firm on not raising taxes while cutting a lot
of the social programs that have grown like mushrooms over the last
thirty years or so. Meanwhile, Governor Jennifer Granholm and the
Democrats are casting about for more ways to lay hands on the money
that the few remaining employed workers in Michigan manage to bring
home. Governor Granholm is campaigning hard to not cut any of the
funds allocated to K-12 education and college scholarship programs.
Her reasoning on this is that Michigan needs to “create a favorable
business environment” and that the way to do that is to have a
well-educated population ready for high-tech manufacturing jobs, such
as putting together wind turbines, one of her favorite hobby-horses.
And, we all know that the government run education system is a model
of efficiency and has no place to save money.
and the state's Democratic leaders are attempting to portray
themselves as being concerned about the decline in Michigan's
unemployment numbers and overall economic situation and, by their
lights, I suppose they are. However, as with the crowd in
Washington, the folks in Lansing have little concept of what it takes
to make a state attractive to new businesses. Rather than looking
for ways to cut taxes and lower the numerous barriers to entry for
businesses in Michigan, the state's Democrats are taking the opposite
tack. Governor Granholm proposal:
Raises the tax on a pack of cigarettes from $2 to $2.25 and taxes
other tobacco products at that new effective rate to raise a
combined $135 million.
• Applies the state's sales tax to professional and college
sports tickets, and concerts, generating $87 million.
• Places a penny tax on each bottle of water sold in Michigan
to raise about $18 million.
• Generates $8 million by reducing the value of state credits
for film production.
• Gathers $83 million by limiting next year's proposed increase
in state earned income tax credits for low-wage workers.
Along with the increased taxes the Democrats are also pushing for a
variety of new regulations and interventions in the marketplace for
energy. For instance, on a trip to Japan in September of 2008, in an
attempt to get Japanese wind turbine manufacturers to open new
factories in Michigan she said
“a legislative agreement will require
DTE and Consumers Energy to shift at least 10% of their power from
renewable sources such as wind power. She said Michigan stands to
create as many as 60,000 jobs in renewable energy industries, but
that the state needs a mandate for renewable energy.” (from
“Granholm pushes for energy mandate to interest Japanese firms”
The governor is also pushing to tighten
state regulations on coal-fired power plants, in spite of the lack of
enough “environmentally friendly” renewable energy sources to
meet the state's increasing energy demands.
“In Michigan, for instance, Democratic
Gov. Jennifer Granholm is talking about tightening environmental
regulation when it comes to coal-fired power plants. Republicans
don't have the votes to impose less regulation. “ (see:
And it's not only the energy generation
sector of the economy which is attracting the governor's attention.
She is also seeking to impose further regulation on auto insurance
companies doing business in the state.
“Gov. Jennifer Granholm has threatened
penalties for any insurance carriers that do not go along with a
freeze on rates for a year.
The insurance consumer advocate, Melvin
Butch Hollowell, in a 335 page report, claims auto insurance has
become unaffordable for too many. He is calling for lawmakers to
change state law to require that insurers obtain the insurance
commissioner's approval before raising rates and they they consider
allowing a low cost auto policy with reduced benefits. Those are
among the 10 changes he is recommending.” ( see:
In making these charges the governor conveniently overlooks the
fact that it is state government requirements that are acting to
drive up the cost of auto insurance for Michigan's drivers. For
starters, the state requires that all auto owners must purchase a
no-fault insurance policy in order to be able to own a vehicle. The
state also does not allow the insurance companies to vary the cost of
their product based on where a driver lives. This has amounted to
requiring out-state drivers to subsidize the insurance of those who
live in the Detroit area – raising their rates, but keeping them
“fair” for the Detroit area, which, surprise, surprise, votes
heavily Democratic. Talking about the increase in insurance rates
gives the governor an opportunity to castigate businesses for
responding to a situation caused by the intervention of the
government into the marketplace.
So, on the one hand the governor talks
a good story about how to improve Michigan's sagging economy, but
with the other she erects barriers to entry of new firms, or
expansion of existing ones. This is typical of those who believe
that only the government is capable of making the “correct”
decisions regarding what needs to be done to improve the prospects of
Michigan's economy. Is it any wonder that new businesses are not
exactly lining up to open or expand in this benighted state? Given
the governor's approach to solving Michigan's economic problems I can
only hope that the Republicans stick to their guns and force the
Democrats to make serious cuts in social programs that, in many
cases, have not been in existence many years, and which we used to
get along fine without. Failure to make real cuts to Michigan's
budget and take steps to keep it from growing like Topsy once the
economy does manage to turn around will only delay that rejuvenation
of the economy of a state which has been suffering from the effects
of recession for most of the last decade. Unless businesses are
convinced that Michigan will become, and remain, a good state in
which to operate we will not see the type of growth that is necessary
to put Michigan back near the top of the economic heap, as it was
when I was growing up.