February 28, 2024

In Granholm Book, Cautionary Economic Lessons From Michigan

After all, years before the rest of the country fell into recession, Michigan, so vested in the automobile industry, was wrestling with a single state downturn — and one that just kept going until the rest of the country unhappily caught up. And years before the rest of the states found themselves trying to patch state budget holes because of falling tax revenues, Michigan was staring at gaps to fill.

And yet, Jennifer M. Granholm, the former Democratic governor of the state, who led it through much of its rocky last decade, says she sees a key lesson from Michigan — a warning, perhaps, more than a model — for the rest of the nation as it tries to create jobs and emerge from an economic funk.

“Everything that is hitting the country hit Michigan first,” Ms. Granholm said in an interview, reflecting on eight years in office in which the state’s economic crisis overshadowed all else. Her response to the crisis, she said, was to cut spending, cut government jobs, cut taxes — the very approach now being promoted elsewhere, particularly after Republican victories in statehouses around the country in 2010.

“We tried all of those prescriptions, too,” said Ms. Granholm, whose final term ended with the start of this year. “We did everything that people would want us to do, and yet it didn’t work.”

She added: “Laissez-faire, passivity, tax cuts, hands-off does not work. And, really, that’s the lesson from this laboratory of democracy which is Michigan.”

The only approach that showed glimmers of success, she said, came when the federal government stepped in — to bail out the auto industry, for instance, and to send stimulus funds that encouraged companies like the ones in Michigan now creating lithium-ion batteries for electric vehicles.

In a state where Republicans took over the governor’s seat in the 2010 election and control both chambers of the legislature in Lansing, Ms. Granholm’s critics say they are unconvinced both by her conclusions and by her claims that she pared back taxes and spending as far as one might; had she truly cut the tax burden and big government, some Republicans said, the state’s picture might now be utterly different.

In truth, even Ms. Granholm, who, along with her husband, Dan Mulhern, has laid out her conclusions in a new book, “A Governor’s Story: The Fight for Jobs and America’s Economic Future,” expressed disappointment in her own ability to fix the state’s limping economy. When Ms. Granholm, a former state attorney general, was elected the state’s first female governor in 2002, she was seen as a rising political star.

“As the person who was in charge of the state at the time and who campaigned on trying to fix it, it was very hard for me to accept myself that I didn’t have the tools to be able to wave a magic wand and fix the loss of manufacturing jobs and the loss of market share of the auto industry and the bankruptcies,” said Ms. Granholm, who is now teaching at the University of California, Berkeley, and says she is “absolutely not interested” in some future political office. “It was hard for me as somebody who’s always been able to succeed at stuff to be able to accept that and move on.”

Ms. Granholm was unwilling to comment on the performance of Rick Snyder, her successor as governor, who this year has approved measures aimed at cutting business taxes.

“The question is for the nation: Is there something that can happen now to prevent it from happening to the whole country and having a prolonged recession in the way that Michigan did?” Ms. Granholm said. “I think there are ways to stop it but it can only happen with a partnership with the federal government, because individual states simply do not have the tools to compete against China or the globe.”

Article source: http://feeds.nytimes.com/click.phdo?i=33eb1b8a518448e17fbfee3eeda3ccf8

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