Ron Morley's Freedom Blog

This is the place where I do my little bit to explain the evils of the State.

Michigan's Governor Granholm has no clue

The Michigan state legislature has avoided another shutdown of the state government by passing a budget resolution that gives them another month to craft a budget that meets the needs of the state. The Republicans are holding firm on not raising taxes while cutting a lot of the social programs that have grown like mushrooms over the last thirty years or so. Meanwhile, Governor Jennifer Granholm and the Democrats are casting about for more ways to lay hands on the money that the few remaining employed workers in Michigan manage to bring home. Governor Granholm is campaigning hard to not cut any of the funds allocated to K-12 education and college scholarship programs. Her reasoning on this is that Michigan needs to “create a favorable business environment” and that the way to do that is to have a well-educated population ready for high-tech manufacturing jobs, such as putting together wind turbines, one of her favorite hobby-horses. And, we all know that the government run education system is a model of efficiency and has no place to save money.


Granholm and the state's Democratic leaders are attempting to portray themselves as being concerned about the decline in Michigan's unemployment numbers and overall economic situation and, by their lights, I suppose they are. However, as with the crowd in Washington, the folks in Lansing have little concept of what it takes to make a state attractive to new businesses. Rather than looking for ways to cut taxes and lower the numerous barriers to entry for businesses in Michigan, the state's Democrats are taking the opposite tack. Governor Granholm proposal:


• Raises the tax on a pack of cigarettes from $2 to $2.25 and taxes other tobacco products at that new effective rate to raise a combined $135 million.

• Applies the state's sales tax to professional and college sports tickets, and concerts, generating $87 million.

• Places a penny tax on each bottle of water sold in Michigan to raise about $18 million.

• Generates $8 million by reducing the value of state credits for film production.

• Gathers $83 million by limiting next year's proposed increase in state earned income tax credits for low-wage workers.


. Along with the increased taxes the Democrats are also pushing for a variety of new regulations and interventions in the marketplace for energy. For instance, on a trip to Japan in September of 2008, in an attempt to get Japanese wind turbine manufacturers to open new factories in Michigan she said


“a legislative agreement will require DTE and Consumers Energy to shift at least 10% of their power from renewable sources such as wind power. She said Michigan stands to create as many as 60,000 jobs in renewable energy industries, but that the state needs a mandate for renewable energy.” (from “Granholm pushes for energy mandate to interest Japanese firms” (see:


The governor is also pushing to tighten state regulations on coal-fired power plants, in spite of the lack of enough “environmentally friendly” renewable energy sources to meet the state's increasing energy demands.


“In Michigan, for instance, Democratic Gov. Jennifer Granholm is talking about tightening environmental regulation when it comes to coal-fired power plants. Republicans don't have the votes to impose less regulation. “ (see:


And it's not only the energy generation sector of the economy which is attracting the governor's attention. She is also seeking to impose further regulation on auto insurance companies doing business in the state.


“Gov. Jennifer Granholm has threatened penalties for any insurance carriers that do not go along with a freeze on rates for a year.

The insurance consumer advocate, Melvin Butch Hollowell, in a 335 page report, claims auto insurance has become unaffordable for too many. He is calling for lawmakers to change state law to require that insurers obtain the insurance commissioner's approval before raising rates and they they consider allowing a low cost auto policy with reduced benefits. Those are among the 10 changes he is recommending.” ( see: )

In making these charges the governor conveniently overlooks the fact that it is state government requirements that are acting to drive up the cost of auto insurance for Michigan's drivers. For starters, the state requires that all auto owners must purchase a no-fault insurance policy in order to be able to own a vehicle. The state also does not allow the insurance companies to vary the cost of their product based on where a driver lives. This has amounted to requiring out-state drivers to subsidize the insurance of those who live in the Detroit area – raising their rates, but keeping them “fair” for the Detroit area, which, surprise, surprise, votes heavily Democratic. Talking about the increase in insurance rates gives the governor an opportunity to castigate businesses for responding to a situation caused by the intervention of the government into the marketplace.


So, on the one hand the governor talks a good story about how to improve Michigan's sagging economy, but with the other she erects barriers to entry of new firms, or expansion of existing ones. This is typical of those who believe that only the government is capable of making the “correct” decisions regarding what needs to be done to improve the prospects of Michigan's economy. Is it any wonder that new businesses are not exactly lining up to open or expand in this benighted state? Given the governor's approach to solving Michigan's economic problems I can only hope that the Republicans stick to their guns and force the Democrats to make serious cuts in social programs that, in many cases, have not been in existence many years, and which we used to get along fine without. Failure to make real cuts to Michigan's budget and take steps to keep it from growing like Topsy once the economy does manage to turn around will only delay that rejuvenation of the economy of a state which has been suffering from the effects of recession for most of the last decade. Unless businesses are convinced that Michigan will become, and remain, a good state in which to operate we will not see the type of growth that is necessary to put Michigan back near the top of the economic heap, as it was when I was growing up.