The Corner

Michigan’s Budget Train Wreck: A National Lesson

Detroit — The difference between Gov. Jennifer Granholm of Michigan and Pres. Barack Obama is that Michigan is required by law to balance its budget.

As Michigan careened towards its second government shutdown in three years this week, citizens were given a hard lesson in the limitations of a show-horse politician who tries to stimulate an economy by accelerating public-works programs and declaring “green” the new growth engine while ignoring fundamental fiscal problems.

Michigan’s plight these days is obvious enough with its auto industry in the tank. But the resulting collapse of state revenue has been obvious to all for eight recessionary years — or at least as far back September 2007, when revenue collapsed, lawmakers gridlocked on a budget, Granholm played politics with a government shutdown to force a tax hike, then promised that the crisis was a teachable moment that must never happen again.

Yet here we are again — because Granholm learned nothing.

The tax increases (a 17 percent income tax hike and a job-killing business surcharge in the middle of the state’s worst downturn since the Great Depression ) plugged the budget hole through 2008. But Granholm — like Obama a pawn of powerful Democratic unions — did not lift a finger on necessary health-benefits, privatization, prison, and other reforms, while her road construction “stimulus” and “investment” in alternative energy contributed little to the state treasury.

As a result, when last fall’s national financial tsunami hit a state already on its knees, the budget buckled anew. The state’s Democratic House — which, like the House of Pelosi, had simply rolled its charismatic-but-leadership-shy executive for two gubernatorial terms — grew uneasy as the state sunk in red ink. House speaker Andy Dillon spoke party heresy, demanding that the outrageously rich benefits of public employee unions be tossed overboard.

Yet Granholm resisted. As in 2007, she punted on structural reform, instead feeding the state’s $1.4 billion federal stimulus windfall to “balance” the budget — a band-aid reform she had promised not to do. With the stimulus papering over the state’s budget hole, Granholm has incredibly, cynically, reverted back to the politics of 2007 — threatening government shutdown, blaming Republicans, even teaming with unions to shout down the benefits reform offered by her own party speaker.

“You can use all the stimulus money to plug up this year’s (budget gap), but then you have a huge crater next year,” said the governor who had proposed the stimulus money to plug the budget gap.

Meanwhile, Medicaid continues to eat ever-larger portions of the state budget, now up to 25 percent from 5 percent 25 years ago (and likely to get worse thanks to Washington as the Wall Street Journal reports here).

Yet these problems — like the gaping deficits that Obamacare and Obamastimulus promise down the road — won’t be Governor Granholm’s problems. The silver-tongued, “first women governor of Michigan,” will end her ruinous reign in 2010. 

— Henry Payne is an editorial writer and cartoonist with the Detroit News. 

Henry Payne — Henry Payne is the auto critic for the Detroit News.

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