Sunday, February 20, 2011

Cassandra of the 10,000 Budget Wars

Am I good, or what?

Jan. 31st.

1) He wants to cut taxes.
2) You're going to pay for it.

Feb. 18th.

Gov. Rick Snyder has proposed a historic shift in the state's tax burden, using a $1.7 billion increase on individual taxpayers to fund $1.8 billion in cuts to businesses, a shift the governor said is designed to improve the state's future by making it more attractive for job-creating companies.

Actually, I give myself a bit too much credit here. Anyone who has paid a whit of attention to the Republicans for the past thirty years knows that "tax cuts" are all they have. If times are good, you cut taxes. If times are bad, you cut taxes. The modern-day GOP is quite possibly the greatest invention man has ever created when it comes to taking money out of the pockets of the many to deposit into the pockets of the few. They will lie, cheat, steal and throw temper tantrums to get that single goal accomplished, and it's working very well, don't you think? Snyder's budget is just a continuation of that trend, and once the dust settles perhaps the chattering class will see that there is nothing "radical" about it at all.

The saddest part of this massive transfer of money from the poor and middle-class to provide for business tax cuts is that it isn't going to work. Yes, we may need a simpler business tax code. I will grant them that. But what is happening here will not make Michigan more competitive in the long run. "Low taxes" are not the be-all, end-all behind a business decision to locate in any particular state - if they were, South Dakota and Wyoming would be exploding with new growth. They are not. As the conservative Tax Foundation's State Business Tax Climate Index points out, it's a bit more complicated than that. For one example, if you want to use the metric of jobs and unemployment in relation to taxes, Nevada and Florida, ranked number four and five on the tax chart, currently have higher unemployment rates than Michigan. Their low, low taxes could not save them from the downturn in real estate and construction - which shows that an economic climate dependent on one industry will always be subject to the tides of the national economy. Think autos and manufacturing in Michigan, and it should become clear. Tax rates have very little to do with it, no matter what the Republicans say.

Diversity in a state's economy is key, and the Snyder plan to remove incentives will bring that current growth in Michigan to a grinding halt. Those stories are starting to appear now, and every. single. one. of them, including the front page of the GR Press today, has included warnings from professionals that are telling us that removing incentives and credits will not only stop the urban development that is currently occurring in-state, it will severely limit our ability to attract new business to come to our state in the future. (And, for Snyder to complain that the process was too "politicized", while he indicates that he will turn the decisions on any future incentives over to the Legislature, is simply mind-boggling. If anyone is going to play politics with tax incentives, it's the working girls and the rentboys in Lansing that are dancing on the strings of the lobbyists who fund their campaigns. But that's a story for another day.) Businesses will go where the deals are, period. I have yet to see anyone say otherwise.

So the Snyder plan, in a nutshell, will take $1.7 billion out of the hands of Michigan consumers - the seniors, the middle-class, the working poor, the very consumers that were guaranteed to spend it at local Michigan businesses. That's going to hurt our economy. He will slash K-12 education and revenue sharing, a move that just might drive some school districts and cities into bankruptcy. That not only hurts our quality of life, which is a key intangible in attracting new business growth, it simply puts a middle man in the form of your local elected officials in-between the state and Republican party's on-going attempt to bust public employee unions. It certainly will result in the removal of more cops and firefighters from Michigan's cities and townships, not to mention the further loss of local services like parks, recreation, libraries and such. He will drive up the cost of college tuition. He will stop incentives to lure new businesses to Michigan, businesses that would diversify our economy into clean energy, advanced manufacturing, entertainment, you name it, they will go where the credits are. And, in a move that shows he is not open to "bipartisanship" and discussion as he has claimed, he is structuring this as an all-or-nothing, my way or the highway proposition.

Any guesses on how all that will turn out?

I've got a few. I sure hope I'm wrong. And I won't root against our state or our governor, as the Republicans used to do. But I will point out the obvious as I see it, as I always have - and all of a sudden, that seems to be a horrible curse more than it ever would be a blessing.

Have fun kids. When we start to fall behind the rest of the nation, something that might not be apparent for a while because auto sales will mask it for the near future, remember where you heard it first.