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West Michigan Policy Forum. Michigan’s Comeback: Where Do We Stand, Where Are We Heading?. Robert Genetski Website: ClassicalPrinciples.com. Outline. Michigan’s comeback Economic freedom and growth Characteristics of best performing states Characteristics of worst performing states

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michigan s comeback where do we stand where are we heading

West Michigan Policy Forum

Michigan’s Comeback: Where Do We Stand, Where Are We Heading?

Robert Genetski

Website: ClassicalPrinciples.com

outline
Outline
  • Michigan’s comeback
  • Economic freedom and growth
  • Characteristics of best performing states
  • Characteristics of worst performing states
  • Michigan’s policy mix
  • How Michigan can become a top performer
outline1
Outline
  • Michigan’s comeback
  • Economic freedom and growth
  • Characteristics of best performing states
  • Characteristics of worst performing states
  • Michigan’s policy mix
  • How Michigan can become a top performer
outline2
Outline
  • Michigan’s comeback
  • Economic freedom and growth
  • Characteristics of best performing states
  • Characteristics of worst performing states
  • Michigan’s policy mix
  • How Michigan can become a top performer
economic policies promoting freedom
Economic Policies Promoting Freedom
  • Low tax rates
  • Government efficiently spending on essential public services
  • Allow markets to operate freely
  • Respect the rule of law
  • Promote overall price stability
state policies promoting freedom
State Policies Promoting Freedom
  • Low tax rates
  • Government efficiently spending on essential public services
  • Allow markets to operate freely

Right to work legislation

Avoid laws fixing wages and prices

Minimize regulations

  • Respect the rule of law
outline3
Outline
  • Michigan’s comeback
  • Economic freedom and growth
  • Characteristics of best performing states
  • Characteristics of worst performing states
  • Michigan’s policy mix
  • How Michigan can become a top performer
outline4
Outline
  • Michigan’s comeback
  • Economic freedom and growth
  • Characteristics of best performing states
  • Characteristics of worst performing states
  • Michigan’s policy mix
  • How Michigan can become a top performer
characteristics of poorly performing states
Characteristics of Poorly Performing States
  • Policies restricting economic freedom:
    • High and rising tax rates
    • Wasteful government spending
    • Onerous regulations
    • Forced unionism (no Right to Work law)
    • Large union penetration
    • Overburdening debt
outline5
Outline
  • Michigan’s comeback
  • Economic freedom and growth
  • Characteristics of top performing states
  • Characteristics of bottom performing states
  • Michigan’s policy mix
  • How Michigan can become a top performer
slide32

How Michigan Compares to Other States

Tax burden

Spending on Education

Spending Infrastructure

Public employees compensation

Union members

Debt

state spending income michigan us 2012
State Spending % Income: Michigan & US (2012)

US AverageMichigan$ difference

General Exp. 14.4% 16.2% $6.9 billion

Education 4.4 6.1 6.4

Welfare 3.6 3.9 1.2

Highways 0.8 0.6 -0.8

Source: US Census; 2012 Annual Survey of State & Local Government Finances

state spending income michigan ogl 2012
State Spending % Income : Michigan & OGL(2012)

OGLMichigan$ difference

General Exp. 12.9% 16.2% $12.4 billion

Education 3.9 6.1 8.4

Welfare 3.2 3.9 2.8

Highways 0.8 0.6 -0.8

Source: US Census; 2012 Annual Survey of State & Local Government Finances

wages salaries per worker 2012
Wages & salaries per worker: 2012

US averageGovt. Premium

Private Nonfarm: $37,400

State & Local employees: $45,500 22%

Federal civilian workers: $74,000 98%

Michigan

Private Nonfarm: $35,000

State & Local employees: $44,000 26%

Federal civilian workers: $68,000 94%

Source: Census; US Bureau of Economic Analysis, Regional Data

compensation per worker 2012
Compensation per worker: 2012

US averageGovt. Premium

Private Nonfarm: $44,800

State & Local employees: $66,500 48%

Federal civilian workers: $105,000 134%

Michigan

Private Nonfarm: $43,000

State & Local employees: $64,500 50%

Federal civilian workers: $100,000 133%

Source: Census; US Bureau of Economic Analysis, Regional Data

slide39

Worse States for Accumulating Debt Burdens on Future Taxpayers

  • 1. Connecticut $48,100
  • 2. Illinois 43,400
  • 3. New Jersey 36,000
  • 4. Massachusetts 28,000
  • 5. Hawaii 27,000
  • 6. Kentucky 26,000
  • 7. New York 21,700
  • 8. California 21,400
  • 9. Michigan 19,300 ($6,000 lower than previous year)
  • 10. Delaware 17,200
  • Source: Institute for Truth in Accounting; Financial State of the States, 2013
takeaways for michigan
Takeaways for Michigan
  • Michigan is no longer the worst performing state, it’s closer to the US average. This is a major improvement.
  • We’re a high-tax, high-spending state. Given its income, Michigan’s annual government spending is $7 billion higher than US average and $12 higher than neighboring states.
  • Michigan’s state & local employees wages & salaries are well-above (26%) the state’s private sector workers.
  • Michigan’s state & local employees have pensions that are twice as large as the state’s private sector workers.
  • Given its income, the state has underfunded highway infrastructure by $800 million a year compared to other states.
  • State debt is high (9th worse) but coming down rapidly
how to make michigan a top performing state
How to make Michigan a top performing state
  • Cut tax burdens to below US average

-cut or eliminate all income taxes

-pay down debt

  • Limit state spending to essential public services:

- reduce public employee compensation

- shift public employees to IRA pension plans

- end corporate welfare

- increase spending on highway infrastructure

  • Remove regulations that inhibit individual freedom

- repeal minimum wage to increase real wages