Businessman-politicians often pretend that they are above politics, but they do so at their peril.
Take the fine budget mess Michigan Republican governor Rick Snyder has gotten himself into.
In an otherwise impressive first term, Snyder’s refusal to compromise on tax reform in 2011 has come back to haunt him.
Flush with a landslide victory in 2010 that also blessed the former Gateway Computer CEO with a Republican-controlled senate and house, Snyder introduced a sweeping reform of Michigan’s broken tax code that flattened the business rate to 6 percent and closed special-interest loopholes, including a tax exemption for pension income (which existed in only two states).
But by freezing the individual income tax at 4.25 percent — rather than allowing it to drop to 3.9 percent as previously negotiated by Senate Republicans (in a rare victory over taxaholic Democratic governor Jennifer Granholm) — Snyder needlessly exposed himself to charges that he was handing out tax breaks to his business pals while balancing the budget on granny’s back.
Typical of his style, Snyder’s strategy was to please both Republicans and Democrats by balancing tax hikes (the income-tax surrender) with spending cuts (to the pensions jealously guarded by powerful public-employee unions). But cooperation with Democrats in Michigan — as in Scott Walker’s Wisconsin — is a pipe dream, and he got little in return for meeting unions halfway. By sacrificing boldness for the center, Snyder marooned himself without allies.
Pleased with his economic math, accountant-turned-pol Snyder ignored his own party’s appeals for political sanity. Republicans ultimately capitulated to their honeymooning GOP governor’s plan, but political insiders warned of the consequences.
“By asking lawmakers to impose new taxes on voters’ pensions while minimizing the inevitable confrontation with public-employee unions,” wrote Leon Drolet, head of the Michigan Taxpayers Alliance, in the Michigan View, “our new governor has invested too much of his political capital into the impossible — and not enough into confronting reality.”
Three years later, Snyder is getting a cold bath of reality: Democrats have made his “granny tax” to pay for “Big Business tax cuts” a centerpiece of their longshot campaign against his reelection. (Snyder holds an eight-point lead over opponent Mark Schauer, a former Democratic congressman, in recent polls.)
It doesn’t have to be this way.
Snyder’s adept management of the state’s budget has left a nearly $1 billion budget surplus — unthinkable just four years ago under Granholm’s fiscal chaos. But instead of further reducing tax rates or using the money to repair the state’s crumbling roads, Snyder is stuck fighting the tax-reform battle of three years ago.
Having made a hash of politics and running scared of the Democrats’ “candidate of the rich” label, he’s had to offer a strained olive branch to those making less than $60,000 a year, a new tax loophole called the homestead property-tax credit.
The proposal, which restores a tax-refund loophole that Snyder had trimmed in his 2011 tax reform, has been mocked by Democrats as too little, too late while alienating Republicans, who are still smarting from the broken promise to reduce the individual rate to 3.9 percent. “I understand it,” GOP senator Jack Brandenburg says of Snyder’s proposed tax credit. “But go knock on a guy’s door and try to explain it.”
Snyder the Simplifier has become Governor Loophole. He could have trusted taxpayers with their own money. He could have lowered the tax rate for individuals as he did for business.
He could have listened to his party’s conservatives in the first place.
— Henry Payne is an editorial cartoonist and the auto critic for the Detroit News.