Perpetual Crisis in Lansing: A Case Study in Fiscal Idiocy
By Josh Mayer '13
You can feel it in the air from Alpena to Zeeland, from Sault Ste. Marie across the Mackinac Bridge and down to the unincorporated community of Hell. It almost feels like it never left us, but the season for Granholm bashing has returned to Michigan once more. Though Democratic Governor Jennifer Granholm is term limited, the battle to replace her as the holder of the worst job in these United States is picking up and the amusement factor certainly will not let campaign watchers down. And, as if holding her job for eight years were not enough to put a giant target on her back, Granholm’s fellow “Communist Fascist Marxist-Leninist-Stalinist” Harvard Law graduate President Barack Obama has reportedly placed her on his short list for the Supreme Court vacancy to be made by Associate Justice John Paul Stevens’s upcoming retirement.

Fortunately, State Senate Majority Leader Mike Bishop (R-Rochester) has made the rational decision to call Granholm “this governor” instead of her name (à la Ariel Sharon versus Yasser Arafat). And he is not even running.

More dangerous than Bishop’s divisive ramblings in a polarized year is the inane nostalgia among Michigan Republicans for the days of Granholm’s predecessor, John Engler. During her time in office, Granholm has often portrayed the annual budget shortfall and now biannual government shutdowns as the fault of Engler’s tax policies. This is not an entirely fair assessment — the failure to reach a compromise is on the hands of failed leadership on both sides of the aisle. However, she is right that ‘starving the beast’ — a principal Engler strategy — has unquestionably failed Michigan and the country.

In his final term, Engler pushed for and approved gradual tax cuts, many of which continue to take effect today. Over the last decade, Michigan famously shed jobs like employment was going out of style. Engler’s tax cuts drove the balanced budget that existed at the time of passage off the proverbial bridge. Contrary to the screams of Tea Party-associated organizations, Michigan’s per capita tax burden is the second lowest in the Midwest (coming in slightly higher than Indiana), and it has been unsustainable for years.

The Club for Growth, et al. are unintentionally correct in that Michigan’s tax system contains appalling inefficiencies. Michigan still operates with an ostensibly flat income tax and, including its targeted tax breaks, the system comes out as rather regressive. Naturally, any fix would be described as redistributive, socialist and anti-American, even though 35 states and the District of Columbia have already implemented progressive tax systems. If it means raising any tax rates or revenues, the anti-tax groups and lawmakers prefer the deadweight loss, thank you very much.

And there’s the problem. Max Weber, in his epic lecture “Politics as a Vocation,” describes the two ethics to be balanced: an ethic of ultimate ends, in which the one acts strictly based on one’s own convictions (e.g. religion); and an ethic of responsibility in which one acts after taking the individual results of the action into consideration. Those who want to ‘starve the beast’ have run a campaign for several decades now to demonize taxes and spread mistrust of the government. When the government’s abusive dietician determines that government income ought to be cut without considering how or whether spending is cut, the lawmakers have acted irresponsibly and unnecessarily put their constituents at risk.

Like many states, Michigan constitutionally mandates a balanced budget, and some of the first budget cuts have been in education and public safety. Just because lawmakers use ‘starve the beast’ as an excuse to support popular tax cuts does not mean that they will support the necessary, but unpopular, spending cuts. In a distressing irony, the Michigan Promise scholarship program became a broken promise during Michigan’s most recent budget negotiations; meanwhile, lawmakers on both sides of the aisle have refused to touch public employees’ health care due to union pressure.

Of the seven serious candidates for governor of Michigan (three of each major party and one ex-GOP independent), only two — former Congressman Joe Schwarz (I) and state Rep. Alma Wheeler-Smith (D) — have proposed any increase in revenue through taxes. For instance, Schwarz has mentioned decreasing the sales tax while expanding it to services. Naturally, the Club for Growth berated his atrocious, tax-hiking socialism. The other candidates seem to be scared that they might think too loudly about it.

Michigan cannot afford another term of fruitless tax reform negotiations. When lawmakers are more willing to sacrifice public safety and critical education funding than increase the efficiency of the tax system, it’s time for responsible politicians to retire the ‘evil tax, evil government meme.’ Starving the beast’ has been most effective at starving citizens of necessary services and politicians of their brain cells.

Issue 23, Submitted 2010-04-21 03:27:03