In a profile that appeared in today's Washington Post, Gov. Jennifer Granholm misused data on her targeted business tax break and subsidy programs, the administration's primary response to a Michigan economy that has lost 632,600 payroll jobs since Gov. Granholm's inauguration back in 2003.
The Post writes, "Since taking office in 2003, Granholm has created 163,300 positions, her office says," a likely reference to jobs directly attributable to business "incentive" programs. In reality, for the Michigan Economic Growth Authority, the state's flagship corporate welfare program, the actual number is more like 7,755 since this governor took office.
The article does not explain how Gov. Granholm came up with the larger figure, but it most likely comes from MEGA's "direct jobs" estimates. However, those figures are problematic for a number of reasons.
First, they include job "retention" projects that grant firms discriminatory tax preferences just for not eliminating jobs.
Second, these figures double-count many jobs. For instance, a company called Plastech received MEGA tax credit deals for promising to create jobs, but then filed for bankruptcy, during which a number of its plants were purchased by other firms. These firms also applied for MEGA credit deals and received them — for the same job promises! MEGA includes both sets of job promises in its tallies.
The most significant example of such double-counting is General Motors — by far the largest MEGA beneficiary — which this year consolidated all its existing job creation or retention deals under new tax break agreements. The original and the "consolidated" credits are for the same job promises, but they all go down twice in MEGA's accounting.
However, by far the largest source of puffing in these figures is that they only count jobs promised by corporations in return for special tax breaks and other benefits offered by the state — and most of those promised jobs never materialize. These factors explain why the most recent data received by the Mackinac Center indicate that only 7,755 new jobs have actually been created out of all the MEGA credits offered during Gov. Granholm's six years and nine months in office.
A review and analysis of the state's economic development programs that includes a deeper look at the state's actual results can be found here.
What Michigan needs is real reform, not gimmicky programs that produce press releases rather than real economic growth and rising incomes.
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