Governor Jennifer Granholm of Michigan has presided over a state that was in a severe economic down turn long before it was cool. Michigan, despite every effort by the Governor to “diversify” Michigan’s economy, has a 14.7 percent unemployment rate.
Naturally Governor Granholm proposes to raise taxes.
According to the Detroit Free Press, “House Democratic leaders hope today to begin writing bills that could reduce the Earned Income Tax Credit for low income taxpayers, increase tobacco taxes and eliminate or reduce some tax exemptions.”
The purpose for raising taxes is not to erase a budget deficit, though Michigan has got one of those. Instead Jennifer Granholm proposes to raise taxes in order to restore spending cuts that the Michigan Legislature has imposed for the 2009-10 budget to erase the deficit.
“Granholm said she’s urging them to adopt narrowly targeted taxes, rather than raising general taxes such as the income and sales taxes. She has called for more revenue to pay for the Michigan Promise college grant program, revenue sharing for local communities, Medicaid and aid to public schools – all items cut significantly in the 2009-10 budget lawmakers approved, but which still hasn’t reached Granholm’s desk for signing.”
Jennifer Granholm has favored a kind of government centric, top down approach to dealing with economic malaise and unemployment that tends to be favored by liberal Democrats, especially Barack Obama. Jennifer Granholm has attempted to enact government programs to create “green jobs” in Michigan to offset losses in traditional Michigan industries, such as automobile manufacturing. Jennifer Granholm has also attempted, with some success, to attract film makers to Michigan with tax credits.
Nevertheless, Michigan’s economic malaise and high unemployment persists. Jennifer Granholm’s approval ratings are stuck in the thirties or forties despite having been reelected comfortably in 2006.
The problem with Jennifer Granholm’s approach stems from a misunderstanding of why an economy grows and how jobs are created. Government policies tend to suppress economic growth and job creation, not encourage them. This is especially true in a high tax, high spending, high regulation state such as Michigan.
Ironically President Barack Obama is attempted to replicate Jennifer Granholm’s top down, government centric economic recovery policy, with similar results. One might have looked at Michigan’s record to understand the ineffectiveness of government jobs programs and then acted accordingly. President Obama has chosen not to do so.
Jennifer Granholm is bared by term limits from seeking a third term as Michigan governor in 2010. Lt. Governor John Cherry is favored to be the Democratic candidate for governor while State Attorney General Mike Cox is favored to be the Republican candidate. Mike Cox is favored to win in recent polling. Mike Cox is running on a platform of tax cuts to alleviate Michigan’s economic woes.
Source: Granholm, Dems devise new taxes, Chris Christoff, Detroit Free Press, October 6th, 2009