BY ALEX BILES
Published April 19, 2010
With Michigan’s gubernatorial race heating up and an utterly substandard pool of candidates to choose from, I felt like utilizing this opportunity to interject four suggested economic reforms our next governor should tackle following the November election.
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1. End the MEDC.
The Michigan Economic Development Corporation has epitomized government mismanagement over the last decade. The MEDC utilizes money gathered from taxpayers and redistributes it through targeted tax breaks given to Gov. Jennifer Granholm and her buddies’ favorite companies under the guise of promoting job growth. This “picking winners and losers” mentality is the worst type of central economic planning.
An incident in March exemplified the failure when the MEDC gave $9.1 million in tax breaks to Richard Short, a convicted embezzler whose company address was located in a trailer park. Pictured shaking hands and smiling with Granholm, Short was arrested the next day on counts of a parole violation and failure to pay restitution for previous charges.
The Mackinac Center for Public Policy found that for every 100 jobs the government promised through the MEDC since 1995, only 29 ever arrived. And Michigan continues to lead the nation in unemployment at 14.1 percent, according to the U.S. Bureau of Labor Statistics. It’s time to recognize the MEDC’s failures and abolish an organization that’s robbing Michigan taxpayers, especially when funds could be allocated toward more worthwhile causes.
2. Introduce HSAs.
Republican Indiana Governor Mitch Daniels penned an excellent Mar. 1 piece in the Wall Street Journal describing the process of allowing state employees to opt out of Indiana’s public insurance plan in favor of health savings accounts (HSAs). Under Indiana’s HSA plan, $2,750 is deposited into each state employee’s account for health expenditures, with the state covering the plan’s premium. The goal was to incentivize participants to spend money wisely, make better health decisions and help Indiana’s budget in the process.
HSAs were a tough sell under Daniels’ first year as governor five years ago — only 4 percent of employees opted out of public insurance in favor of HSAs. Today, over 70 percent of Indiana’s 30,000 state employees utilize HSAs. Their satisfaction with HSAs is extremely high — only 3 percent have returned to their public provider. In 2010 alone, Indiana will save over $20 million exclusively due to the HSA option and the state’s total costs will be reduced by 11 percent.
Facing one of the most constrained budgets in the nation, perhaps it’s time Michigan considered embracing a similar health care plan that expands choice and lowers costs without compromising quality.
3. Legalize it.
Legalizing growth, possession and sale of marijuana in Michigan and modestly taxing it would bring much-needed revenue to a state whose ailing budget is hemorrhaging green. Beyond the social freedom and potentially increased tourism that legalization would bring, the economic benefits of marijuana legalization are patent.
4. Stop stupid projects.
Under President Barack Obama’s stimulus plan, $244 million was allocated to construct a high-speed rail line between Detroit and Chicago. Some think new trains will help the economy by providing an enhanced means of travel and the impetus for increased development. Unfortunately, this notion is rooted in the imagination of naïve individuals lacking any trace of practicality — people who envision oodles of Michiganders crowding lines, eagerly awaiting rides in sleek trains from Pontiac to Gary.
This concept could work if anybody you knew rode trains on a regular basis to begin with. But in 2009 alone, Amtrak lost over $22 million operating trains in Michigan. Under the proposal, Michigan has agreed to cover any losses from the high-speed initiative. To cover these potential loses, the state will either raise taxes or cut budgets for other programs like education.
A one-way ticket from New York to Washington on the high-speed Amtrak Acela starts at $133 and this is a subsidized rate. For lower-class individuals to afford these trains even larger subsidies would have to be enacted, again begging the question of how many tax increases or budget cuts Michigan will have to make.
Advocates argue trains will enhance travel between downtowns, but fewer than 8 percent of Americans work in major city downtowns and these individuals tend to be bankers, government workers and lawyers. It shouldn’t be the state of Michigan’s priority to subsidize the travel of wealthy individuals.