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    Who are the NERD fund donors Mr Snyder?

    Raise the curtain.

    Another week another chance for tax-and-spenders to cripple the state


    By Nick, Section News
    Posted on Mon Jun 11, 2007 at 08:01:57 AM EST
    Tags: (all tags)

    Another Monday morning and another action packed week in front of us in Lansing as the legislature continues to deal with an SBT replacement and the FY2008 budget deficit.  I mean, this is fun and all, but I'm sorta ready for them to get something done.  And I can't shake the feeling that if it weren't for the black-hole strength leadership deficit in the chief executive's office we'd be in a lot better shape than we are today.

    But there's no sense daydreaming and wishing we could change the dynamic in Lansing.  It is what it is and we've got to deal.  To that end, lets take a look this morning at where we are and some of the places we can or should go.  

    Sarah Kellogg's taken a look at economic indicators over the weekend and filed a story popping up in the Booth newspapers across the state.  Turns out Governor Granholm's second favorite buzz-word, "diversification," (right after "plan," she has one and she's "working it" and she's "working it" and she's "working it") is in fact taking place in Michigan but maybe not the way she'd hoped.  See, you can diversify an auto-sector-intensive employee base in two different ways.  Either increase non-auto jobs or decrease auto jobs.  Either way, the percentages will swing and boom.  Diversification.

    As Kellogg reports at MLIVE, we're getting a lot of diversification right now through method number two.

    Not that economists are cheering the news of this type of diversification. No one expected it to come through a severe recession prompted by layoffs, plant closings and an exodus of Michigan families to other states with brighter economic opportunities.

    "When you adjust it for inflation, payroll is actually down," said David Littmann, an economist with the Mackinac Center for Public Policy, a Midland-based free market policy group...

    Manufacturing isn't the only industry struggling. The hospitality and retail industries -- both of which are heavily dependent on good economic times -- have been feeling the effects of the multiple-year recession, according to the report.

    "Michigan had the worst overall (hotel) occupancy levels nationwide for 2006 and 2005," said Steve Yencich, president of the Michigan Hotel, Motel and Resort Association, a Lansing-based trade group.

    But hey, on the upside, the medical and professional service sectors are booming.  In Michigan there's always a need for nurses and bankruptcy and foreclosure lawyers.

    Read on...

    Now over in the FREEP they're taking a look at continued fall-out from Pfizer's decision to close up shop in Ann Arbor.  Life-science companies in and out of the state right now have their pick of 2,100 freshly pink-slipped scientists.  And sure, a few have found jobs in the state.  One local life-science operation, for instance, just received over 200 resumes.

    At NanoBio Corp., a small Ann Arbor company working on products to treat and prevent serious infections, executives have hired six former Pfizer employees. It has another eight jobs to fill and is interviewing Pfizer workers....

    For now, it's too early to say how many workers will stay in the Ann Arbor area or the state. So far, half of the 1,000 employees offered out-of-state job transfers with Pfizer have accepted them, but that number is likely to rise...

    And lets not forget the spin-off losses that occur when a company decides it can't do business in Michigan and starts transferring thousands of families out of the state, firing thousands of other.  Sure, the city will lose a lot of tax revenue (though I'm sure they more than made up for it with those 1,000 Google phone bank workers, right?) but the local economy also gets hit with a devastating blow.  Local restaurants, hotels, bowling alleys, bars, quick-lube stations and even dry cleaners feel the pinch.

    The Pfizer closure couldn't have arrived at a worse time. Business at (Hick's Cleaners') three stores in the city has dropped 40% over the last five years.

    To cope, he's reduced his workforce to 17 employees from as many as 50. And he and his wife now do everything, from pressing clothes to driving trucks.

    "We've got to do what we've got to do," he said.

    We could go on like this all morning, sadly.  The last numbers nationwide put Michigan again at the bottom of the pack with a 7.1% unemployment rate, the highest in the nation, and with no immediate savior on the horizon.  That's where we are.  Now how does that inform the good people in Lansing and affect what they're looking to do with the upcoming budget deficit?  Depends on which side of the aisle you're sitting on.

    There's still lots of talk about reforms and spending cuts but Granholm and Speaker Andy Dillon in the House continue to beat the tax-hike drum.  A $2 billion budget deficit could easily be made up, they reason, by $2 billion in new revenue.  And their friends in the liberal press are starting to accept as a certainty the assumption that they've got the stones and the political capitol to push a massive tax hike through the House and the Senate.  Though one could ask, if Dillon has unanimous support from his caucus, why haven't they voted on a tax increase yet, but I digress.

    What the Taxocrats and so many of their reporter friends continue to ignore is the fact that tax increases stagnate economic growth.  

    I'm thankful every time I hear an elected official address the problem as it is and not as it appears to be.  Representative Tom Pearce is great at pointing this out (and I've heard him say it more than once)... the issue facing Michigan isn't a budget crunch or a fiscal deficit, it's a stagnant economy.  And the solution isn't going to be found in balancing the books.  That's a necessary step... it controls the bleeding... but the solution is in patching the wound.  In getting this economy moving again.  So it becomes even more important to remember the old axiom, if you want less of something, tax it.  

    A tax increase will drive employers out of the state, it'll send retirees scrambling even faster for Florida, it'll push families who're sitting on the edge right over the borders and it'll send the signal to investors and job makers in forty-nine other states that not only is Michigan in the worst economic shape in the nation but it's also the only state where they won't be safe from one fiscal year to the next.  

    Bad form.

    So what to do?  Well, let's start with what NOT to do.  Great example in the Lansing State Journal this morning.  Don't throw away a $1 (yes, 100 pennies) a year lease on the Michigan State Police Headquarters in East Lansing to move into a new multi-million dollar building a couple miles away.  A new building that'll cost taxpayers $6 million more than the current building.  Is that the right signal to send to investors and job makers and families in the middle of an economic crisis?

    Especially when the Governor just tried taking 29 troopers off the street and has now forced MSP to limit mileage for troopers to as little as 40 miles a day?

    Pesky details, I know.  And believe me, they aren't getting in the way of the administration's attempts to spin this.  Their latest approach is to paint it in New Deal language.  LSJ reports a Department of Management and Budget official had this to say:

    "More importantly in terms of the financial, I think the bigger issue here is the construction jobs in terms of downtown Lansing and stimulating economic growth as well as creating accessibility to government services and decreasing urban sprawl."

    (Edward ) Woods (III, DMB) said the project will create 540 jobs during construction. The current building will need at least $16.2 million in repairs over the next several years, he said.

    Still, according to a Senate Fiscal Agency analysis using State Budget Office data, the new building will cost the state almost $6 million more over an 11-year period.

    Is that what Michigan is reduced to?  Our economic situation is as bleak as the Great Depression?  We're going to go back to solutions from the 1930s?  Why not take 540 folks from the nearest unemployment line and hire them to plant trees or sweep the streets with toothbrushes?  That'll create 540 new jobs and more importantly, in terms of the financial, I think the bigger issue here is that that'll help downtown Lansing by stimulating economic growth and beautifying the city.  I mean, if that's our standard and that's the type of language we're using...

    Oh, yeah, we've cut to the bone up there in Lansing.  Can't afford to cut another dollar from the budget.  Except maybe we can.

    And the Detroit News hits again on one of the biggest and brightest areas for real substantive change in the way this state does business with taxpayer dollars.  

    The Hay Group, a private consulting firm hired by the Legislature, in 2005 proposed putting all school employees in a statewide pool offering a set amount of benefits. It estimated at the time that savings to school districts could rise to more than $400 million a year.

    Teacher health care costs are expensive even when compared with those of other public employees. Figures produced by the Hay Group and the state Senate indicate the average insurance cost for a school employee is $11,362, or $2,000 more than the average state worker.

    And that $400 million is before addressing the $2,000 per-teacher difference in benefit levels.  There are tens of millions of dollars a year, maybe more, that could be saved by changing those benefits without necessarily even bringing them down to the level of other state employees (alone a fairly generous package).  

    Then lets not forget our other options.  Prison privatization, capping welfare at four years for able-bodied adults (we're the only state in the Midwest without a limit and four years would be the most generous limit in the region) and eliminating the office of the first gentleman.  I know, that last one isn't that big a line item but when you're trying to live within your means you start by cutting the peripherals.  Translate the OTFG into household terms... Dan Granholm Mulhern is the cable-TV of Michigan's budget.  Kinda nice to have around if you've got the extra cash, usually going to leave you dumber than before you turned him on, more likely to waste your time than to teach you anything at all and the first thing that has to go when you're scaling back on expenses.

    Mix it all together and you've got a budget deficit made even more dangerous by tax-and-spenders whose big-government answer to every problem threatens to devastate the state's economy for Michigan's next generation... assuming their parents stick around.  When you put it in those terms it makes for an exciting week in Lansing, doesn't it?

    < Dick DeVos speaks to POAM | Long-time Saginaw County GOP activist, Lorraine Corl, laid to rest today >


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    I view advice from Republicans (1.00 / 1) (#1)
    by NoviDemocrat on Mon Jun 11, 2007 at 11:47:17 AM EST
    on the Michigan economy like I do advice from Dick Cheney on Iraq. It's been so wrong so often that no sane person should take it seriously. Back in the late 90s, the Republicans pushed tax cuts and increased government spending. When questioned what would happen if the economy falter, they promised that their tax cuts would generate increased revenues to pay for their over-spending. The opposite happened as tax reciepts fell. Then the economy crashed with the dot com bubble bursting and 9/11. The Republican answer was more tax cuts. They guaranteed that the tax cuts would generate more jobs and more revenue. The opposite happened as the economy tanked and businesses closed up. Now Republicans are pushing tax cuts and cutting programs and services. Sorry, we've stopped listening because every plan you've presented has been a failure and every prediction has been wrong.

    couldn't be more wrong... (5.00 / 1) (#2)
    by Nick on Mon Jun 11, 2007 at 11:56:01 AM EST
    Tax cuts of 2001 fueled one of the longest sustained periods of economic growth the nation has ever seen.

    In less than four years the United States added over 3 million new jobs, continues to add thousands every month (everywhere but Michigan) and the DJIA continues to shatter previous records.

    Meanwhile, tax receipts at the federal level are higher than they've ever been.  Ever.

    But yeah, the overspending is a huge problem.  In DC AND in Lansing.  I'm glad you've come around and recognize the state is overspending.

    Props.  

    • "new" jobs by NoviDemocrat, 06/11/2007 02:46:26 PM EST (none / 0)
    No (5.00 / 1) (#6)
    by Nick on Mon Jun 11, 2007 at 03:00:03 PM EST
    I mean adding NEW jobs post 9/11.  You remember that, don't you?  

    Here's a breakdown from BLS.gov...

    January 2001, the first month of George W. Bush's first term and pre-tax-break, total employment was 136,181,000.  By January 2006 that number was up to 141,481,000.  That's a jump of over 5 million in the black.

    Want to go to January 2007?  144,275,000.  Weeeeeeeeee!  

    One state that didn't add a single job from 2003 through today... Michigan.

    You expect answers from NoviDumocrat? (none / 0) (#10)
    by sandmman on Wed Jun 13, 2007 at 08:18:11 AM EST
    You'll likely never get them. He/she/it can only spout DumocRat Party talking points.

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