Commentary
Under Democratic rule, Lansing is headed back in time
New legislative majority wants to play policy ping pong, not build the future
Michael Van Beek sees leadership in Lansing that’s more interested in reversing the past than building a better future. Gov. Gretchen Whitmer | Michigan Executive Office of the Governor
Gov. Gretchen Whitmer said in her State of the State address a couple weeks ago that she aims to “move Michigan forward.” Her policy priorities and those of her political allies, however, would take Michigan back in time. Most of the ideas coming out of the new Democratic-controlled Legislature simply reverse changes Republicans made when they were the majority.
The most touted fiscal reforms in Lansing are increasing the state earned income tax credit and exempting public pensions from taxes.
Expanding the Michigan EITC is nothing new: It was created in 2006 by Gov. Granholm to supplement a similar federal benefit, both aimed at low-income workers. The value of the Michigan credit was originally set at 10% of the federal credit.
Lawmakers increased that number to 20% in 2009 and then reduced it to 6% in 2011. There have been several attempts to bump it back up over the last decade, but they failed. Proposal 1 of 2015, which 80% of voters rejected, was one such effort.
Policymakers repealed a special exemption for public pension income in 2011, but there have been repeated attempts to reinstate it. The tax change had an impact on a large number of taxpayers, but it had far less of an effect than the rhetoric around it implies. It’s not clear how exempting one type of retirement income will do anything more than provide a small benefit to retirees lucky enough to have a pension financed by taxpayers.
Lawmakers’ proposed labor reforms are similar. Democrats in the Legislature want to repeal Michigan’s right-to-work law, which just turned 10 years old.
All the law does is prevent unions from forcing workers to pay them. It does not limit unions’ ability to organize or to bargain. The only beneficiary of repealing right-to-work is unions, increasing their revenues.
The consequences of repealing right-to-work, on the other hand, are many. Michigan may become less attractive for new business investment.
States without right-to-work signal to potential employers that unions are less accountable and are more likely to aggressively organize workplaces. This creates extra costs, agitation and discord in workplaces. Michigan had such a reputation for decades, and some policymakers want to turn the clock back to that time.
Also high on the priority list is reinstating Michigan’s prevailing wage law. This requires public entities, such as school districts and road commissions, to pay artificially elevated wage rates for construction projects paid for by taxpayers. This greatly benefits unionized construction companies. They typically have higher labor costs than nonunionized firms, and mandating a prevailing wage neutralizes this disadvantage when they bid on public projects.
Taxpayers are the ones responsible for the higher costs imposed by mandating higher wages on these construction jobs. Households and businesses are shorted on infrastructure, as state and local governments cannot get as much bang for the buck when forced to spend more on labor costs. The law was just overturned in 2018, so taxpayers have hardly even started to benefit.
One must wonder if this is the future in a purple state like Michigan. Call it public policy ping pong. The party in charge reverses the previous ruling party’s recent reforms. That party then promptly reinstates those same reforms the next time it holds power. Swinging back and forth like this creates permanent uncertainty. It’s hard to see how this would make Michigan a welcoming place for new people and employers.
To be fair to the new majority in the Legislature, Democrats may be resorting to these policies simply because they are not practiced in being in control. Perhaps they just haven’t had time to develop genuinely new ideas.
But it could also be an indication of how much influence special interest groups have in Lansing. Most of the new Legislature’s top priorities are sacred cows for certain interest groups, and that might explain why they’re first out of the gate.
For instance, lawmakers are posed to quickly repeal the state’s third grade reading law, which technically prohibits schools from socially promoting students who can’t read well. It’s only been in effect for a couple years.
There are numerous exemptions to the rule and 99.4% of third graders advanced to the fourth grade last year. Benton Harbor and Detroit — districts known to have loads of struggling readers — held back exactly zero students as a result of the law. So, why the rush to undo a law that most districts ignore?
Simple: Because school officials and education bureaucrats hate the law. It requires them to do all kinds of extra work. If the law were repealed, school officials would no longer have to track, notify parents and submit reports on behalf of third graders who can’t read. What a relief!
The image Gov. Whitmer and her political allies have painted of Michigan’s future looks a whole lot like our immediate past. Were Michiganders better off then? It is difficult to say from here, but if the state’s newly elected legislative majority gets its way, we might just find out.
Michael Van Beek is director of research at the Mackinac Center. Email him at vanbeek@mackinac.org.
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Under Democratic rule, Lansing is headed back in time
New legislative majority wants to play policy ping pong, not build the future
Gov. Gretchen Whitmer said in her State of the State address a couple weeks ago that she aims to “move Michigan forward.” Her policy priorities and those of her political allies, however, would take Michigan back in time. Most of the ideas coming out of the new Democratic-controlled Legislature simply reverse changes Republicans made when they were the majority.
The most touted fiscal reforms in Lansing are increasing the state earned income tax credit and exempting public pensions from taxes.
Expanding the Michigan EITC is nothing new: It was created in 2006 by Gov. Granholm to supplement a similar federal benefit, both aimed at low-income workers. The value of the Michigan credit was originally set at 10% of the federal credit.
Lawmakers increased that number to 20% in 2009 and then reduced it to 6% in 2011. There have been several attempts to bump it back up over the last decade, but they failed. Proposal 1 of 2015, which 80% of voters rejected, was one such effort.
Policymakers repealed a special exemption for public pension income in 2011, but there have been repeated attempts to reinstate it. The tax change had an impact on a large number of taxpayers, but it had far less of an effect than the rhetoric around it implies. It’s not clear how exempting one type of retirement income will do anything more than provide a small benefit to retirees lucky enough to have a pension financed by taxpayers.
Lawmakers’ proposed labor reforms are similar. Democrats in the Legislature want to repeal Michigan’s right-to-work law, which just turned 10 years old.
All the law does is prevent unions from forcing workers to pay them. It does not limit unions’ ability to organize or to bargain. The only beneficiary of repealing right-to-work is unions, increasing their revenues.
The consequences of repealing right-to-work, on the other hand, are many. Michigan may become less attractive for new business investment.
States without right-to-work signal to potential employers that unions are less accountable and are more likely to aggressively organize workplaces. This creates extra costs, agitation and discord in workplaces. Michigan had such a reputation for decades, and some policymakers want to turn the clock back to that time.
Also high on the priority list is reinstating Michigan’s prevailing wage law. This requires public entities, such as school districts and road commissions, to pay artificially elevated wage rates for construction projects paid for by taxpayers. This greatly benefits unionized construction companies. They typically have higher labor costs than nonunionized firms, and mandating a prevailing wage neutralizes this disadvantage when they bid on public projects.
Taxpayers are the ones responsible for the higher costs imposed by mandating higher wages on these construction jobs. Households and businesses are shorted on infrastructure, as state and local governments cannot get as much bang for the buck when forced to spend more on labor costs. The law was just overturned in 2018, so taxpayers have hardly even started to benefit.
One must wonder if this is the future in a purple state like Michigan. Call it public policy ping pong. The party in charge reverses the previous ruling party’s recent reforms. That party then promptly reinstates those same reforms the next time it holds power. Swinging back and forth like this creates permanent uncertainty. It’s hard to see how this would make Michigan a welcoming place for new people and employers.
To be fair to the new majority in the Legislature, Democrats may be resorting to these policies simply because they are not practiced in being in control. Perhaps they just haven’t had time to develop genuinely new ideas.
But it could also be an indication of how much influence special interest groups have in Lansing. Most of the new Legislature’s top priorities are sacred cows for certain interest groups, and that might explain why they’re first out of the gate.
For instance, lawmakers are posed to quickly repeal the state’s third grade reading law, which technically prohibits schools from socially promoting students who can’t read well. It’s only been in effect for a couple years.
There are numerous exemptions to the rule and 99.4% of third graders advanced to the fourth grade last year. Benton Harbor and Detroit — districts known to have loads of struggling readers — held back exactly zero students as a result of the law. So, why the rush to undo a law that most districts ignore?
Simple: Because school officials and education bureaucrats hate the law. It requires them to do all kinds of extra work. If the law were repealed, school officials would no longer have to track, notify parents and submit reports on behalf of third graders who can’t read. What a relief!
The image Gov. Whitmer and her political allies have painted of Michigan’s future looks a whole lot like our immediate past. Were Michiganders better off then? It is difficult to say from here, but if the state’s newly elected legislative majority gets its way, we might just find out.
Michael Van Beek is director of research at the Mackinac Center. Email him at vanbeek@mackinac.org.
Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.