Michigan's economy is on the precipice. The state's unemployment rate is 14.7 percent, the highest in the nation. Over 632,000 jobs have been eliminated under Governor Jennifer Granholm's watch. Another 360,000 are expected to be lost by the end of next year, bringing the total jobs lost in Michigan to approximately 1,000,000 by the time the governor finishes her second term. The numbers are staggering. Michigan's economy is in such desperate shape that the words "failed state" hardly seem adequate to describe the situation.
It should not really be a surprise, however, that Michigan's economy is struggling for life. Just like excess cholesterol can create blockages and restrict blood flow to the heart, high taxes and oppressive regulations restrict job creation in a state and strangle its economy. To bring Michigan back from the edge, the governor will have to perform an economic angioplasty and cut taxes across the board, reduce regulations, and slash red tape to get the state's economic heart pumping again.
But this is not what the governor is doing. Rather than across the board tax cuts, she is proposing tax increases. On Monday the state's latest income tax hike went into effect. Now Michigan employees are paying 4.35 percent of their incomes to the state, up from 3.94 percent. The 6 percent sales tax has been extended to additional service industries. Granholm said that these increases were still insufficient, so on Tuesday evening, the Michigan House of Representatives voted to postpone indefinitely the inflationary increase on the personal exemption of the state's income tax. It also voted to impose a 3 percent tax on doctors' gross sales. But they aren't finished. There are many more tax increases to come.
Granholm insists these tax increases are necessary to help balance the state's budget; however, they are not likely to bring in the revenues the governor claims they will. Tax rates do not exist in a laboratory-like vacuum. Real people react to having less money in their pockets by spending less, which will have a negative affect on the small businesses that have already suffered the past few years. This will inevitably lead to additional job layoffs. Once again the number of taxpayers decreases while the number of people needing social services such as unemployment and food stamps increases. What will Granholm end up with after all these additional tax increases? Another larger than expected budget gap further on down the line. And so goes the vicious cycle.
But the tax hikes are not the only gift that Governor Granholm has given the people of her state. For a number of years now she has been touting her plan to revitalize Michigan's economy through her green jobs initiative. Now, she is correct that Michigan has been too dependent on the auto industry and needs a far more diverse economy. Her green jobs initiative, however, is a ridiculous boondoggle.
The Washington Post published a piece on Tuesday that highlighted how badly Granholm's green jobs initiative is failing. The biggest problem is that Governor Granholm is utilizing central planning economic principles rather than free market principles. Instead of allowing the market the flourish and determine what jobs are created and where, Granholm has chosen to focus on creating only so-called green jobs. There are two problems with this. First, governments and governors can't create private sector jobs. The only thing they can do is foster an environment of low taxes and low regulations that encourages job creation. Second, these green jobs that Granholm says are Michigan's future simply do not exist in any meaningful quantity. The Washington Post noted in its piece that the governor's office claims her initiatives have created 163,000 jobs, a number the Mackinac Center for Public Policy disputes. The figure is actually closer to the Michigan Economic Growth Authority's number of 7,755.
That does not mean that there isn't a market for jobs in Michigan, however. There is an increasing demand for new coal-fired plants, which would create many new jobs. The problem is they are not the jobs Granholm wants. Because those coal fired plants are not environmentally friendly, the governor has torpedoed many of the projects that would result in guaranteed jobs and increased energy production. It seems Michigan citizens must wait for the green jobs revolution that will never come.
In Granholm's 2006 State of the State address, she said the following about her plan to turn around Michigan's economy: "...And in five years, you're gonna be blown away by the strength and diversity of Michigan’s transformed economy." Unfortunately, her policies have only blown more and more jobs and workers out of Michigan.
Kim Priestap's Bio
Kim Priestap is a business owner, freelance writer, and contributing editor at Wizbangblog.com. Kim has been published in the Washington Examiner and Pajamas Media. She lives in northern Michigan with her husband, Steve, their three kids, and two dogs.
Posted
10-08-2009 12:01 AM
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