Obama Part 2 meet Granholm Part 2. It’s Groundhog Day in America.
A year after winning re-election over a rich, out-of-touch, China-outsourcing CEO (sound familiar?), Jennifer Granholm took Michigan to the fiscal cliff over tax hikes. The same song is being played in Washington today by Granholm’s Harvard-educated twin, Barack Obama.
In D.C., nerves are raw. “Over the last two years, Congress and the president have held an endless series of secret negotiations,” complained Alabama senator Jeff Sessions today. “But the only thing these secret talks have produced is a government that skips from one crisis to the next.”
Sound familiar? It’s the fall of 2007 in Lansing all over again.
“By midday today, state House members were no closer to raising the state’s income tax from 3.9 percent to 4.6 percent than they were when an unprecedented marathon session began at 10 a.m. Friday,” reported The Detroit News on Sept. 17, 2007 as Michigan lurched towards a government shutdown. “While key Democrats said the votes would be there by midnight to increase the levy, which would generate about $1.1 billion annually, House leaders were equally vehement that there would not be a single GOP vote for a higher income tax rate today or Monday.”
Democratic Rep. Paul Condino, a lead negotiator, praised Republicans said to be considering a cave on higher taxes – despite “great personal risk” from groups threatening recalls (lawmakers were trying to plug a $1.75B hole for the fiscal year starting Oct. 1).
“Democrats say a major tax increase is needed,” reported The News. “Republicans, demanding budget cuts and government spending reforms, continued to oppose it.”
Sound familiar? In the end, Republicans agreed to an income tax hike (by 12 percent raising $1.4 B) after a brief budget shutdown – under media and public pressure.
“This budget agreement is the right solution for Michigan,” crowed a victorious Guv Granholm. “We prevented massive cuts to public education, health care, and public safety while also making extensive government reforms and passing new revenue. With the state back on solid financial footing, we can turn our focus to the critical task of jump-starting our economy and creating new jobs.”
But the jump-start never happened. Two years later, the unemployment rate had DOUBLED from 7.3 percent to 14 percent. And those tax revenues that were raised?
“Within literally hours of passing the tax hike,” remembers the Mackinac Center’s Jack McHugh, “the legislature passed bills spending the entire $1.4 billion.” In 2010, Rick Snyder inherited a $2 billion deficit amidst a stalled economy. The lesson is the same: pro-growth policies grow revenues, not tax hikes.
Something to think about as Obama Part 2 skips – Granholm-like – from one crisis to the next.