Monday, January 30, 2006

Granholm Working for Michigan

Several weeks ago, Bostonian Exile and I had a conversation going about Michigan's gubernatorial race and Exile said, "show me how Granholm is working to make Michigan competitive again." Let me start by directing him to Granholm's five-point economic plan as announced in last year's State of the State address - Jobs Today, Jobs Tomorrow - as the single most important initiative to put Michigan back on track. For the sake of brevity, here are the highlights:
    1. Restructure business taxes in Michigan to encourage job providers to keep jobs here.

    2. Create thousands of new jobs by accelerating $800 million in university and road upgrade projects and by creating new tools to upgrade schools, downtowns and nursing homes.

    3. Train out-of-work citizens to step into fields that need workers right now.

    4. Make college accessible to all through the proposed New Merit Scholarship program.

    5. Invest in creating thousands of jobs for tomorrow. The Jobs for Michigan Fund will allow the state to invest $2 billion in bond proceeds over the next 10 years to create thousands of good-paying jobs that can never be outsourced, that will keep our kids in Michigan and that can diversify our economy… all without raising taxes.

What exactly are the employment figures for Michigan? A recent Free Press article reported the following: "Using the household count, Granholm cites federal statistics that show a net gain of 98,600 jobs in Michigan since she took office. But the U.S. payroll survey shows a net loss of about 80,000 jobs under Granholm. Meanwhile, the Michigan Republican Party uses different U.S. labor department figures to claim that Michigan lost 160,000 jobs while Granholm has been governor." The figures vary depending on the count used, but the article also points out, "In 2004, President George W. Bush's re-election campaign alternately used the household or payroll count, depending on which showed a better picture at any given time." [Emphasis mine.]

By way of comparison, our country lost 2.6 million manufacturing jobs since March 2001 under the Bush administration. Bruce Katz of the Brookings Institution states, "Though the state has been hit especially hard by the restructuring of its manufacturing sector, the crisis is not unique to Michigan but national in scope. [Emphasis mine.] The entire United States lost 13% of its manufacturing jobs since the beginning of the last recession." He also believes Granholm is on the right track - no thanks to the federal government.
Michigan's leadership is doing the right things to help the state's economy during this period of dramatic restructuring. Last year, Gov. Jennifer Granholm's proposed 21st Century Jobs Fund was enacted and will invest billions in the research, development and commercialization of new technologies and industries. The governor and Legislature also agreed on $600 million in tax relief for the manufacturing sector.

Likewise, Michigan's congressional delegation has fought hard to help the state and nation retain high-quality manufacturing jobs and assist laid-off manufacturing workers. But despite such efforts, the federal government has not done its part.

The federal government helped to create today's globally competitive economy by relaxing trade restrictions through agreements such as NAFTA, while doing little to help manufacturers retain and upgrade their U.S. plants, help workers adjust to the demands of the new economy or update the ways we provide for health and retirement security.

Simply put, the federal government failed to help retain high-wage, high-productivity manufacturing.

The DetNews also recently highlighted the federal government's failure to help Michigan in an editorial stating that "Japan and China regularly lower the value of their currency by various means to gain an advantage in the U.S. market. Both countries buy up American dollars, which pushes down their own currency value and makes their exports cheaper." This currency manipulation gives the Asian automakers an advantage and "the impact on per-vehicle profits could be as much as $2,000... That's a significant obstacle and is one reason the Japanese automakers glean up to 70 percent of their profits from the U.S. market."

Michigan automakers need some help, but as the Det News pointed out, "help from Washington is unlikely. President George W. Bush, in one of his more impolitic remarks, told the Wall Street Journal last week that Detroit should not look to the government to solve its problems, but should build cars that consumers find "relevant." It was a cheap shot. But the reality, unfortunately, is that Bush and Congress have little incentive to aid Detroit's automakers. States that voted Republican in the last presidential election are full of factories bearing the names of Japanese, South Korean and German auto firms."

Another proposal Granholm put forth last week in her State of the State address calls for developing a state-run 401(K) savings plan aimed at small businesses that don't offer such plans. Susan Tompor at the Freep reports that "experts agree that small business owners could use some help -- and a state-packaged plan might be a way to do it...[and if the state pulls it off] it could make Michigan a more cutting-edge state for anybody who wants to start a small business -- or continue working at one."

DeVos has yet to come up with his own economic plan for Michigan, but "Republicans, who control both chambers of the state Legislature, see tax cuts as the magic bullet for Michigan's economic stagnation." However, Michael LaFaive, director of fiscal policy at the conservative Mackinac Center for Public Policy, thinks targeted tax abatements are "unfair to employers who bear their fair share of the tax burden, and he says mounting evidence proves they're not a cost-effective way to grow jobs."

Even Brian Dickerson, columnist for the DetNews, can see the drawbacks to constant tax abatements:
But the reflex to waive taxes for any employer who dangles a dozen jobs in Michigan's direction feeds the public suspicion, memorably articulated by Leona Helmsley, that "only the little people pay taxes." The profligacy with which lawmakers create exemptions suggests that corporate taxation is one of those superfluous extras, like the rust-proofing offered by some car dealers that may be dispensed with by request.

The rub, of course, is that many of the government services corporate tax revenues support aren't superfluous at all. Schools, police protection and other vital municipal services are a critical part of what makes any community a viable place to do business. Exempting a favored few from the reasonable cost of those services can only dishearten the majority who bear their fair share.

There are other examples I could give to support Granholm's accomplishments and plans to grow Michigan's economy, but it would be easier for Exile to check this link and read the reports from various media sources.

I didn't mention the adverse effects rising gasoline prices and health care had on our manufacturing either, but they can't be discounted. Neither can the fact that job creation during the Bush administration has been the lowest since World War II. Even since the 2003 tax cuts, job growth has been historically weak, growing at less than half the average rate for similar periods in comparable post-war recoveries.

Republicans can say what they want about Granholm, but considering the dismal economic accomplishments of the Bush administration - and the trickle down effect its had on manufacturing - I'd say Granholm's done a heckuva job.


ExDemocrat said...

Wow...where do I start? First, I have a short attention span, so I won't even attempt to address your entire post. Governor Granholm finally has a plan? Oh yeah, it's campaign time. Hasn't she been governor for nearly four years? And she just now figured out she needs a plan? And Kathy, please find some objective sources. Granholm's web site, american progress, the freep and det news are good if you want the left slant. I prefer to think for myself. You can go to (bureau of labor statistics) and find that manufacturing jobs in Michigan have been in a fairly steady decline since June of 2000. At that time we had 905,700 manufacturing jobs. The projected number for December 2005 is 669,900 Even more depressing are the Flint statistics. Since 1990, manufacturing jobs have gone from 55,000 to below 23,000. (Unfortunately, statistics at the state level only go back to 1990; I've always heard that we peaked in the early 70's at 100,000+) So I must agree with Bostonian..."show me how Granholm is working to make Michigan competitive again." The key word is working, not talking. Oh and one more thing, when a politician says "invest", that means spend, spend, spend. I don't see how borrowing $2 billion is going to create thousands of good paying jobs .

Anonymous said...

Thanks for pointing out the discrepancies in the statistics. All that I can say is that I believe that MI has lost and continues to lose jobs at a shocking rate because that is what I see around me every day. Can you explain why nearby manufacturing states like Ohio are adding jobs while we are losing them in MI? Granholmnomics is too reliant on unions and the public sector. Privitization and right to work legislation. The unions always get in the way of education and economic reform.

Anonymous said...

I meant to say that privatization of government functions and right to work legislation would be good things, but not likely to happen under granholm.

Anonymous said...

Privatization? What a joke. Companies like Halliburton, KBR, Blackwater Security and others handle jobs that used to be government functions and it costs the taxpayers much more. Privatization is a code name for screw the taxpayer out of their money. There is no oversight of contracts, inflated budgets, and much money greasing many hands at the top levels of the government. Privatization is also an excuse to drive down wages and outsource jobs so the people at the top can grab more for themselves.