Posted on 12/12/2005 5:20:06 AM PST by machman
The current U.S. expansion has lifted the fortunes of nearly every state in the country, with the notable exception of Michigan, which is busy reclaiming its 1970s's title as home of the rust belt. Sad to say, politicians in both parties are only making things worse. Amid the decline of the Big Three auto companies, Michigan ranked last in income growth last year and was the only state not hit by a hurricane to have lost jobs. United Van Lines reports that more people moved out of Michigan last year than in any year since 1982, when the state jobless rate hit 14%. Today it is 6.1%, well above the national rate of 5%. Political disarray in Lansing has only compounded the trouble.
(Excerpt) Read more at online.wsj.com ...
Count me as one...
MI is falling on its own liberal spike. Conservatives should move into IL, IN or OH & let them sink themselves.
I'm not going anywhere. I'm collecting land for the future.
Sorry, I thought the Editorial page was free. I think it is if you go in through editorialjornal.com
Here is the rest of it.
The current U.S. expansion has lifted the fortunes of nearly every state in the country, with the notable exception of Michigan, which is busy reclaiming its 1970s's title as home of the rust belt. Sad to say, politicians in both parties are only making things worse.
Amid the decline of the Big Three auto companies, Michigan ranked last in income growth last year and was the only state not hit by a hurricane to have lost jobs. United Van Lines reports that more people moved out of Michigan last year than in any year since 1982, when the state jobless rate hit 14%. Today it is 6.1%, well above the national rate of 5%.
Political disarray in Lansing has only compounded the trouble. The year started with some promise, as the Republican-controlled legislature debated broad-based tax cuts to help spur a recovery and aid such struggling manufacturers as Delphi Corp., the auto parts maker. But if you think the Republicans in Washington have bumbled things, take a look at the muddle in Michigan.
On November 30, GOP leaders sent a compromise economic development bill to Democratic Governor Jennifer Granholm. Republicans would get a few business tax cuts -- temporary and targeted -- in exchange for a $400 million corporate welfare fund that Ms. Granholm could parcel out to her political allies, right on the eve of the 2006 election. The cuts amounted to a 1/750th reduction in the tax burden.
But then Ms. Granholm outfoxed Republicans again when she discovered a loophole in the law allowing her to enact the investment fund and scrap the tax cuts. So Ms. Granholm will now be able to romance big business with taxpayer aid, while the small business and technology companies that have been keeping the state afloat have to continue to endure the state's current tax burden.
The Granholm strategy of chasing smoke stacks with a fistful of dollars isn't likely to yield much in the way of an economic rebirth in Michigan. A version of this corporate-welfare strategy was first tried by former Governor John Engler, who was otherwise a highly successful reformer and tax cutter over three terms. But after spending $3 billion over 10 years, there was "no improvement in Michigan's per capita income, jobs, or unemployment," according to a study by the Mackinac Center, the state's leading think tank.
This week Republicans are expected to pass their tax cut package once again. But Ms. Granholm, after agreeing to the tax relief in negotiations, is now threatening another veto. Her latest excuse is that the Republicans in Washington, D.C., are cutting $1 billion in federal cash that goes to Michigan's "needy farmers, families and students," and thus the state will have to make up the difference. A veto would be an act of political bad faith, but in any case these nickel-and-dime tax cuts aren't enough to help the state's economy.
How many more Michigan companies have to file for Chapter 11 or flee the state before the politicians in Lansing get serious about a growth agenda? Step one should be to speed up the elimination of the state's single business tax, which is scheduled to expire in 2009. Michigan has the fifth highest business tax burden in the country, and it is the only state to levy a tax on business production. Delaying tax cuts is like a store announcing a future sale: It provides an incentive to postpone purchases and investment. A cap on the growth of annual spending would also help constrain the political class.
For too long Michigan has let itself be hostage to the fortunes of the Big Three auto firms, which would be like Pittsburgh waiting for the steel mills to come back. The only thing less likely is that the Detroit Lions will make it to the Super Bowl sometime soon.
The state needs to make its economic policies more attractive to all business, including the growth industries of technology, financial services and communications. If that doesn't happen, says Hillsdale College economist Gary Wolfram, "expect the flow of businesses and the talent sector of the state to become a stampede Southward in the years ahead."
What makes you think economic growth is something Democrats want?
That, and scrap the SBT and enact tort reform.
Unfortunately, Michigan has had mostly Republican state government for the past decade or longer. Governor Jenny took office in 2002, but before that John Engler was Governor and the legislature has been Republican for a while.
There are broader economic trends here.
That's true but which party would be more favorable to pro-growth policies if political reality allowed it?
No question, I agree, and I'm glad that my own state (a lot bluer than Michigan) has elected enough Republican governors to turn around the Dukakis mess and get our taxes down to the middle of the pack. This is in spite of a heavily Democrat legislature.
What were the Michigan legislators doing all throughout the 90s and early 2000s? Their Republicans are more conservative than ours, but perhaps they stop caring about anything other than some of the social issues. Sorry to be bitter but you'd think Michigan could have become a showplace for what Republican government could do to a state in decline. Instead, we have what?
I'm curious, what do you think of the impact of Arab immigration to Michigan?
From afar, it seems like immigration is the only factor that separates the northern states that are thriving from those which are dying. Without immigration, Massachusetts would be Pennsylvania, and that would not be a good thing for our economy. (I'm not in favor of unlimited immigration but we need some people coming in.) I feel like Arab immigrants are the only people who seek out Michigan as a place to live.
You are right on with that one. Michigan's economy thrived in the 90's on the back of gas hog SUV's. Amazingly, the auto industry got a tax brak for folks to purchase these things. Engler and the Republican legislature could have really transformed this state in the 90's, but there was no sense of urgency thanks to the phantom Clinton/internet economic boom. Now the chickens have come home to roost. I'm no Granholm fan, but her hands are tied by the Republican legislature. She can't do anything on her own. Hopefully, Dick Devos will become the next governor, and he will be able to enact structural reforms and improve the business climate.
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