Favor them or oppose,
the changes of direction embodied in Gov. Rick Snyder’s
budget and tax proposals represent a huge departure from the previous
eight years of Michigan governance (some would say the previous 12 years). In
particular, the main thrust of the Granholm administration’s policies was to
first insulate the status quo
political system from disruption, and serve the people second. That's less
surprising than it sounds since this is the default stance of political careerists on both sides of
the partisan divide.
Perhaps most starkly, Gov. Snyder’s
recommendations highlight the new governor’s status as a
non-politician coming from outside the political system.
For example, rather than
seeking broad-based business tax cuts to grow the state economy, Gov. Granholm’s
eight years were filled with special deals handing over billions of state
taxpayer dollars to a succession of fad industries. Investors and
entrepreneurs were forced to become hat-in-hand favor-seekers, empowering
politicians and bureaucrats by making them the source of special privileges. A
22 percent business tax hike in 2007
announced to those job providers who lacked such political connections,
“You will be milked to feed the political establishment’s favored ‘winners.’”
Not surprisingly, the
state’s economic problems only grew worse and went far deeper than the
implosion of Michigan’s dwindling share of an otherwise healthy American auto
industry. Even as the rest of the country experienced economic growth, almost
every sector in this state was in decline, including ones with only tangential
connections to autos, such as furniture and chemical manufacturing.
In contrast, rather than
continuing to grow a state corporate welfare empire, Gov. Snyder
would mostly replace this with across-the-board business tax
cuts. These are wrapped into a comprehensive tax system overhaul,
including the repeal of a state income tax exemption for pension income.
The latter is a striking
example of the governor not hesitating to challenge a politically powerful
interest, senior citizens and the AARP. The governor's willingness to pursue
this reform is nevertheless unfortunate, since it would be unnecessary if the
state’s political elites had the will to cut-back excessive government employee benefits.
Nevertheless, the proposed
business tax cuts are without question a prerequisite to putting Michigan’s
beleaguered economy back on a growth track, which is the big picture this
non-political careerist governor is focused on — even when it entails substantial
On the budget side, during Gov.
Granholm’s years a state government “structural deficit” was never addressed.
As revenues stagnated, spending on prisons, Medicaid, regulatory
expansions and, most notoriously, government employee pay and benefits,
all continued to grow. Gaps between desired spending and actual revenue
were continuously patched-over with accounting gimmicks and tax hikes.
Again charting a very different
course, Gov. Snyder has proposed significant cuts in the sacred cows of
K-12 and higher education spending, and in state revenue sharing payments
to local governments. He’s using a “carrot and stick” approach to encourage
school districts and local governments to scale back those excessive employee
benefits, and state employees also are on notice that the governor wants
$180 million in concessions.
Snyder’s status as an
outsider is apparent in all of this, and also in contrast to the
inclinations of a Legislature composed largely of political careerists. Such
politicians advance their careers by never seriously upsetting the applecarts
of politically powerful interests, including the union-dominated public school
establishment, corporate welfare beneficiaries, local governments, the
higher education establishment and others.
Snyder’s proposals step on all
those special interest toes, which explains the angst they have generated
in some corners of the Legislature. Indeed, for all the apparent partisan
conflict, Gov. Granholm’s system-serving policies could never have become
law but for the bipartisan cooperation of a Republican Senate for all eight
years of her tenure and a GOP House during the first four years.
Michigan’s new governor hasn’t
rocked all the special interest
boats, but he’s challenged enough of them to show that he’s a very
different kind of leader. Time will tell whether these new policy directions
are sufficient to turn Michigan around, but if they fail it won’t be because
Gov. Snyder placed serving the political system ahead of all else.
James Hohman is a fiscal policy
analyst and Jack McHugh is senior legislative analyst at the Mackinac Center
for Public Policy, a research and educational institute headquartered in
Midland, Mich. Permission to reprint in whole or in part is hereby granted,
provided that the authors and the Center are properly cited.