Unions, Unions, Unions

In my last post, I criticized the Governor for not understanding how morbid Michigan's business economy has become. Oh sure, she's talking about our malaise, but she fails to understand that Michigan has NOT caught a cold that will eventually heal itself. Michigan has a cancer that can only be cured by radical surgery.

The most significant point I wanted to make was Governor Granholm's misplaced focus. I continue to argue that economic growth and prosperity must come first. An educated work force and all the other good things the Governor envisions for Michigan will follow growth. The Governor has nothing on her agenda for combating Michigan's anti-business environment. Central to Michigan's anti-business attitude is its labor laws and the UAW. For Michigan to return to prosperity, Michigan must do something radical. For Jennifer Granholm, this means she must take on a core constituent: labor.

Impeding Michigan's return to economic growth is its labor laws. During the late 1970's and early 1980's, many have said the Big Three lost their one true opportunity to combat the UAW and Michigan's labor laws. Many believe to this day, the Big Three should have bit the bullet and forced a cataclysmic crisis with labor in the early 1980's. Only then could the US auto industry hope to create the necessary economic profits to sustain itself and compete with more efficient foreign manufacturers. Well, the opportunity has returned again, and this is GM's and Ford's last chance. Unfortunately for Chrysler, it's too late.

It's time to take on labor. It's time to become a right to work state. It's time for GM and Ford to realize that the UAW must be severally weakened for all time. It's time and it's the last chance.

It's time to do more than fight over balancing the state budget. It's time for Republicans to force significant change, or force a crisis. It's time to connect Michigan's labor laws to the budget process. It time to stand up and fix our anti-business environment, or shut the government down.

Make Michigan competitive, it's time to force significant change to Michigan's labor laws.

Michigan Governor Granholm's 2007 State of the State - One Michigan into Economic Oblivion

Governor Granholm gave her fifth State of the State of Michigan address. There were many ideas that I thought were good ideas; however, I am disappointed. The Governor's priorities will be to continue to treat the economic symptoms instead of tackling the disease. Michigan is not going to attract new business to our state in any meaningful way!

Economic development in Michigan is going to be dismal. Jennifer Granholm made one interesting observation: business taxes are not completely responsible for Michigan's poor job growth. I agree. However, she failed to tell Michiganders why Michigan keeps loosing jobs to other states. Well, there are many reasons. All having to do with Michigan's anti-business climate including: unions, unions and unions.

Face it, Michigan, unions fail us. They don't protect jobs. They don't bring new jobs. They just continue to perpetuate our economic slide that began in 1975. Aren't you tired of this yet? Or, are you just going to move out of the state like so many others.

The Governor also addressed education. Again, I agreed with her. An educated workforce is critical to a successful economy. Problem is, the Governor had her cause and effect backward. Growth attracts the educated, not the other way around. That's why less than 30% of Michigan's college graduates remain in Michigan. As long as Arkansas continues to out grow Michigan, then it will not be long before Arkansas exceeds Michigan in its educated workforce.

Jennifer Granholm gave a strong energetic speech with many interesting ideas, but because she lacked the correct focus and strategy, it just came across as cheesy. "We are one Michigan", heading to the poor house.

Michigan Needs a Crisis!

Toyota is creating manufacturing jobs all over America, except for Michigan. Why?

I could endlessly list the reasons why, but that's a waste of time. Let's just start with the most important reason; Michigan has given up! We've decided that business growth is not necessary to our future. We've also decided that the auto industry is too tough an industry for Michigan, and that the conditions to attract Toyota is too drastic for Michigan's morality and lifestyle. In other words, Michigan is too union sympathetic and too entitlement centric.

Now, I know the MEDC and the Governor would vigorously argue this point, but really, what are they doing new today to change Toyota's mind? I keep reading articles about Toyota's need to build five new plants around America to keep up with growth. What's more unbelievable is Toyota's wages are comparable to other auto industry wages. The fact is, Michigan has given up. The Governor, the Legislature, the MEDC, the Democrats and the Republicans have all conceded Toyota to other U.S. regions. The reason doesn't matter. But if Michigan isn't going to truly compete in Michigan (which is Michigan's only industrial cluster besides government), then the state is truly dead for business.

About two years ago, I represented a Michigan manufacturer before the MEDC. Without going into the specifics, the MEDC was "unable" to help. The "rules" for helping the company prevented the MEDC from really tackling the issues that plagued that employer. Well, that employer continues to make investments and add jobs, but not in Michigan.

The unfortunate reality is, Michigan is so poorly viewed by almost every business executive in the nation, that Michigan can only now turn opinion with radical changes. Can we do it? Yes! Is it possible to forge the will? Only if the "smart" people in Michigan give up on the old notions and embrace the new notions that allow other states to grow. However, I'm not optimistic, and I think we need a real crisis to change minds. Let's start a real crisis with Jennifer Granholm's speech tomorrow.

Jennifer Granholm's State of the State address Tuesday night should be watched by every Michigan citizen. I am more interested in the radical ideas that will make people very unhappy, then I am in the populist issues that everyone seems to agree on. That may seem strange, but I support creating a crisis environment in the state.

As I talk to my neighbors, I am disheartened by their lack of interest in the State's economy. Fewer and fewer Michiganders make a private sector living. More and more work for a government, a university, or the medical industry. The private sector economic woes continue to be a distant conversation, and not a direct threat to their livelihood.

But, that's how Michigan has always behaved. I vividly remember how seriously ill the state's economy became in the late 1970's before any substantive changes were made to revive it. Problem was, those changes were no where near decisive enough to tackle this slow drag to oblivion that Michigan is on today.

Until a crisis is created artificially or naturally, Michigan will continue its economic slide and the remedy will become increasingly bitter to swallow.

Are new taxes steam-rolling at us in Michigan?

Friday, February 02, 2007
Report may pave way for tax hike
Mark Hornbeck / Detroit News Lansing Bureau

LANSING -- A blue-ribbon panel will lay the groundwork for a tax hike, without specifying which tax to raise, when it releases its report on the state budget to Gov. Jennifer Granholm today.

Tom Clay, a consultant to the group and director of state affairs for the nonpartisan Citizens Research Council of Michigan, said Thursday the report stops short of calling for a tax on services to shore up the budget. But Clay said the report notes that "services is the one area of the economy where the state tax system is completely disconnected from the economy."

Michigan taxes goods -- other than food and prescription drugs. But it doesn't tax services such as lawn care, movie tickets and haircuts.

Clay provided budget and revenue data to Granholm's group and read all of its report drafts. His assessment of its findings was confirmed by another person familiar with the 19-page report, who asked not to be named.

Report discourages tax cut

The 12-member committee was headed by ex-Govs. James Blanchard and William Milliken and included ex-lawmakers and former budget and treasury officials. The current shortfall is expected to exceed $800 million.

Granholm is under pressure to develop a strategy quickly: Her State of the State address is Tuesday, and her 2007-08 budget plan is due on lawmakers' desks Thursday.

A business tax cut, proposed by business groups and some Republican lawmakers, is not the way to go, the report says. The $1.9 billion Single Business Tax will be eliminated at the end of this year. Granholm has said the replacement tax must generate the same amount of revenue. But Senate Republicans last week proposed a $290 million business tax cut.

"The group is in agreement that cutting taxes at this stage is not a good idea," Clay said. "The evidence doesn't support it."

The advisory panel, appointed last month, was widely seen as a way to provide cover for Granholm to raise taxes. This report, which is certain to draw criticism from some Republican leaders and anti-tax groups, is not likely to dispel that notion.

Statistics cited in the report show businesses pay a smaller share of state and local taxes than they did 10 to 15 years ago and that Michigan's business tax burden is nationally competitive, Clay said.

He said the report doesn't specifically call for the Single Business Tax replacement to be "revenue-neutral, but it gives the sense that full replacement (of the $1.9 billion in annual revenue) is the right thing to do."

"Did you expect anything less from that group? That has been their solution all along," Rose Bogaert, chair of the anti-tax Wayne County Taxpayers Association, said of the panel's apparent support for tax hikes and the replacement of the SBT. "There is no excuse, given the state of the economy, for these people to do such an unconscionable thing."

Bogaert called a possible tax on services "regressive" and said it would further push young professionals out of the state.

"The solution for bringing people into Michigan is not to tax them more," she said.

Trimmer government urged

The panel's document also calls for streamlining government but does not propose detailed budget cuts, except in the area of corrections.

"It says we should reduce our prison population and treat nonviolent criminals more like neighboring states," Clay said. Michigan's prison incarceration rate per capita is 40 percent higher than other Great Lakes states, according to a report by the Center for Michigan, an Ann Arbor-based think tank.

"It lays the groundwork for a careful examination of state priorities, potential cuts in some areas, doing better in some areas," according to Clay.

The report, co-authored by Craig Ruff and Bill Rustem of Lansing-based Public Sector Consultants Inc., provides a history of how Michigan got into this budget predicament and concludes there are no more short-term fixes.

Discussions in the state capital in recent weeks also have focused on replacing the flat-rate income tax with a graduated tax; raising the flat income tax rate; increasing the gas tax; substantial across-the-board spending cuts; and selling state assets, such as the lottery or state parks.

"These bipartisan, cooperative participants are very concerned about the state," Clay said of the advisory panel. "Without question, they believe we have a real mess on our hands."

Joe Menard contributed to this report. You can reach Mark Hornbeck at (313) 222-2470 or mailto://mhornbeck@detnews.com.