Fiscal Extremism Imported from Washington Could Drown Michigan

Grover Norquist, who is the acknowledged leader of the Far Right’s shrink-government-no-matter-what crusade in Washington, DC, doesn’t get much attention outside of the Beltway. Yet his organization’s “taxpayer protection pledge,” which the NY Times reported has been signed by 95% of Republicans serving in Congress, bears an eerie resemblance to the budget plan developed by Governor Snyder and his Republican allies. Norquist runs an outfit called Americans for Tax Reform and is (in)famous for once saying that his goal was to shrink government “down to the size where we can drown it in a bathtub.” Norquist’s pledge commits its signers to:  1) opposing any increase in marginal income tax rates and 2) opposing the elimination of tax deductions or credits unless they are matched by further reductions in tax rates. 

While neither Governor Snyder nor a majority of Republicans in the Michigan Legislature has signed this pledge, their budget plan follows its dictates – with disastrous consequences for Michigan, especially its children and working families.  The Republican plan calls for the elimination of numerous tax credits and deductions for businesses and low-income families and partially eliminates the tax exclusion on retirement income. These changes, which might raise revenue to help address Michigan’s structural budget deficit, are entirely offset by an unprecedented reduction in tax rates for business. Nearly 100,000 companies in Michigan would see their business tax liability go to zero under this plan. 

By adhering to Norquist’s pledge, the Governor and his allies are putting Michigan in a deep budgetary hole and forcing dramatic cuts in funding for schools, despite the fact that the School Aid Fund has a $500 million surplus. Michiganders want a balanced, pragmatic solution to our state’s budget problems. Instead, the Republican majority is preparing to push through a budget and tax plan that fails to produce job growth or invest in priorities like public education but is designed to please the ideologues. We don’t have to do this. It's time to discuss a different direction for Michigan.

We Need a Michigan Strategy, not a "Texas Miracle"

As NY Times Columnist Paul Krugman pointed out yesterday, it's now clear that the State of Texas has one of the worst budget problems in the country, a deficit of some $25 billion that was obscured in part because Texas politicians employed fiscal gimmicks and because that state uses a two-year budgeting cycle, something that has been suggested for Michigan by our new Governor, Rick Snyder. Texas is often held up by some in Michigan as an example of principled austerity and economic success. But the reality is that Texas is in much worse fiscal shape than Michigan (even though we have very significant challenges) and it's economy is not especially impressive despite the fact that persistantly high gas prices benefit oil companies that are headquartered there. 

Governor Snyder's interest in adopting the best practices of other states and countries that are outperforming Michigan is laudable. It's just as important, though, to avoid being blinded by idealogy when chosing whom to emulate. Texas' approach to governing fits the Right Wing's obsession with tax cuts and demonizing government and labor; many on the Right point to Texas or other sunbelt states as the best model for Michigan's future. Yet a Midwestern state like Minnesota not only has much more in common with Michigan but has employed a mix of reforms over the years that prepared it to weather the economic downturn and maintain its middle class. Minnesota's unemployment rate is 7.1%, one of the lowest in the nation, while its average income is $41,000, considerably higher than Texas, Michigan and the national average. Our focus should be on taking an objective look at how places like Minnesota have shed their rust-belt economy and image while achieving more prosperity for all sectors of the population.

See Michigan Future's Report on America's Most Prosperous States and Metros.  

South Oakland Eccentric Endorses Jim Townsend

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