Last September, Obama called Michigan Governor Jennifer Granhold "the best Governor in the country". We here in Michigan snickered over that one. Michigan has been in a one state recession for over 6 years, all under the Governorship of Jennifer Granholm.
Now, Obama wants Governor Granholm as Energy Secretary? O_o
Or as a possible Supreme Court nominee? O_O
Can someone born in Canada serve on the Supreme Court? Yes, it is a well known fact that Michigan's governor is a native born Canadian - no conspiracy theories here, just fact.
Let's talk about her energy policy here in Michigan. She is mandating alternative energy sources - fine, we need this, but in her mandate she has increased the taxes charged on utilities and given permission to the utility companies to increase their prices so they can reach her mandate. So, my taxes go up and my utility bills go up. Thanks Jennifer.
"Best Governor in the country". Well, this is a surprise. Obama endorses Granholm's tax model and economic policies. Let's look at a brief history of Michigan under Granholm's leadership.
Granholm took office in 2003. The Michigan economy had begun to slow in 2002, the year prior to her coming into office. The state unemployment rate was 6.2%, the national average was 5.7%. By the end of 2003 the jobless rate had grown to 7.2 percent, the national rate was 5.7%. There was a job loss of 35,000, however, the unemployment numbers only reflected an additional 4,000 out of work because 31,000 people left the state. At the end of 2004 Michigan’s jobless rate was 7.3 percent, the National jobless average 5.5%. The state lost an additional 35,000 residents and thousands of additional jobs. At the end of 2005 the jobless rate dipped to 6.1% while the National rate dipped to 4.2%. The State continued both its job loss and population flight. At the end of 2006 Michigan’s jobless rate jumped to 7.2%, the National average was 5.0, one third lower than in Michigan. The State lost a net 90,000 jobs and over a hundred and fifty thousand residents. At the end of 2007 Michigan’s jobless rate was 7.6%, the National rate was 4.9%. The state lost 120,000 jobs.
Between 2003 and 2008 two people fled Michigan for every person coming into the state. The total job loss totaled almost 2 million, the net job loss number is lower because auto or industrial jobs were replaced by service industry jobs.
When Granholm first took office in 2003 she announce a long list of liberal social experiments she described as "investment opportunities” to improve Michigan’s economy. Of course she wouldn’t increase the taxes of the working classes, just taxes on businesses and the wealthy to fund these “investments” in “infrastructure”. Sound familiar?
The first warnings came in 2003. Numerous publications including the Wall Street Journal, the NYTimes, and the Detroit Free Press, along with scholars from around the country and world warned that increasing taxes in a slow or stalled economy was a risky proposition. The advise was not heeded.
The Governor was warned that this would start a vicious cycle - increased taxes make the products or services produced in your state more expensive and less attractive - those products and services are less attractive to buyers - they buy fewer of the goods and services - delivering less tax money -meaning another tax increase is necessary and so on and so on. Michigan's death spiral begins.
The first property tax increases were made in 2003. The have continued annually. Property taxes continue to escalate out of control. The Michigan foreclosure crisis is not fueled by adjustable rate mortgages, it is being fueled by job loss, population flight and citizens being taxed out of their homes. I personally know elderly people who had to sell their homes because they could no longer afford their property taxes. People joke about Michigan is that the only thing slowing the population flight is the fact that home sales are so slow. If I could sell my house, I'd be gone in a split second. I was born and raised in Texas and still have family there - that's where I would be, if I could. The average home price in Michigan is approximately $200,000. A home valued at $200,000 in 2003, is now valued at $150,000. In 2003 the property tax on the $200,000 house was $3,000. The tax today on the $150,000 home is $7,000.
Since Granholm was elected, the Michigan sales tax increased from 4% to 6%. In addition, business and personal income taxes have been increased repeatedly. Michigan’s Single Business Tax was replaced, to create a better business climate and “lower taxes”. The replacement, the Michigan Business Tax, was not only, dollar for dollar, identical to the prior tax, but the rates have been substantially increased.
In November 2007 a huge additional tax increase was passed. Business taxes went up 22% and other taxes on the residents of Michigan by 13%. The tax increase was intended to raise over 1 Billion dollars - the money would be used for additional ”investments”. The Governor promised the new tax would solve the problems of the State and “bring prosperity to all”. The Billion plus dollar tax increase was passed despite the continued warnings that it would further slow the economy and would never generate the promised revenue.
In May 2008 the State announced that additional tax increases will be necessary to prevent a suspension of services. Last years 1 Billion increase is generating $500 million less than expected, creating yet another budget shortfall and the need for additional taxes. The improved economy promised by all these increases is no where in sight.
Michigan’s 2008 budget is $44.8 Billion dollars. In 2003 the budget was $38 Billion. The State has lost 2,000,000 jobs while increasing taxes by $6 Billion dollars. The people of Michigan are now the 5th most taxed in the nation.
Michigan government employees have not felt the pinch or belt tightening of the average Michigan resident. According to the Mackinaw Center for Public Policy the average salary and benefits package of a state employee is $75,000 a year, private sector workers have an average salary and benefit package of $58,000 - this number is still substantially above the national average of $48,200. Rarely will you see such a gap between state employees and those they serve.
Michigan’s median income continues to drop. Poverty is on the increase. Detroit’s poverty level is 33%, the highest poverty level of any major city in the Country. Flint and Kalamazoo are tried for 5th in the nation (cities with a population between 65K & 250K) with a poverty rate of 35.5%.
Michigan’s auto jobs are not moving over seas. The are moving from Michigan to other States where the economic environment made auto production more competitive. The BIG THREE - renamed the Detroit Three - by Nancy Pelosi, the Democratic Speaker of the House - are losing sales volume - even in Michigan. In Michigan Toyota car sales are up 36% while US auto sales are declining. The Toyota’s are being built in the US, just not being built in Michigan.
Barack Obama’s suggested economic change is not new … its a return to the past, to the policies of Jimmy Carter. To see his economic principles in practice just look to the economic success of Michigan. The Country cannot afford to be this successful.
If Obama wants to look at a successful Democratic Governor, he would do better to look at Ohio's Governor Strickland. I will post more on him in my next entry.
(I want to give credit to much of this information to McaullysWorld blog)