Setting the stage for 2012's performance

Frank Sinatra memorably sang about it being a long, long time from May to December and about the days dwindling down to a precious few. 

That’s the way it is in Michigan as the darkness closes in early at the end of the day and we begin to take stock of the year that’s about to end. 

For a state that lost 857,000 jobs from 2000 to 2009 and led the country for years in unemployment, there is -- at long last -- good news on the horizon. 

A new University of  Michigan forecast shows Michigan probably will finish 2011 with around 65,000 new jobs, with the prospect of another 75,000 over the next two years.  Nearly a third of those new jobs will come from manufacturing, in particular, from the resurgent domestic auto industry. 

So Michigan, which nearly died when the auto industry went into a tailspin in 2008, is likely to ride our dominant industry back to semi-prosperity next year -- and in some years thereafter. Sure, diversifying our economy remains a desirable goal, but, for the short term, it sure helps to be on the right side of increased auto sales.

That’s got to be what Gov. Rick Snyder is thinking. His poll numbers are way down, thanks to Manuel "Matty" Moroun, who this year spent something like $5 million in TV ads berating the governor and defending his Ambassador Bridge monopoly. He also achieved notoriety as a deep-deep-pocketed, unelected power broker by scattering campaign donations across the political landscape -- donations that will not be visible to the public for months on end due to Michigan's miserably ineffective campaign reporting laws.

Most people in Lansing think Team Snyder botched the campaign to take $500 million from the Canadians to build the New International Trade Crossing across the Detroit River. I’m still trying to figure out why, if the new bridge is so all-fired important to the business community, Moroun got away with his TV ad campaign unanswered by folks who reportedly stood to benefit so much from a new bridge.

Money remains the mother's milk of politics. Put a very wealthy, very determined individual into the mix and the political process becomes noxious indeed.

Detroit staggers on

The other big story of 2011 -- Detroit’s financial crisis -- blew up late this year, when somebody actually read the accounting report concluding the city could run out of cash by next March … and leaked it to the newspapers. 

Of course, Detroit politicians and labor leaders got together for a press conference earlier this month, all asserting the city didn’t need an emergency manager; could manage its problems by itself; etc, etc. 

I’ve talked to a number of folks, both financial experts and politicians, about this. No one is willing to say it on the record, but privately almost all agree on a few points:

1. Even if the city cuts a deal with its unions, it won’t do anything about the structural deficit of billions in unfunded pension and health-care liabilities.

2. A “consent agreement” with the state that allows the city to make some structural changes probably won’t get far enough, either.

3. A takeover by an emergency manager from the state, although it sounds like a good idea in theory, is likely to provoke outrage – maybe even violence – in the city.

The scenario I hear most is this: Detroit will wind up in Chapter 9 bankruptcy and hope some out-of-town judge actually sees it as an opportunity to restructure the entire financial foundation of the city.

How the various constituencies will manage to tiptoe next year around the financial -- and racial -- realities of this terrible and complicated situation is a mystery to me. 

There you have it. In his play "The Tempest," William Shakespeare wrote, “the past is prologue,” suggesting that events past have a way of determining much of the future.  The events of this year – whether they’re our improving economy, struggles to build a new bridge without putting the Legislature up for sale or the dire financial situation for our largest city -- already have written much of story for 2012. 

Editor’s note: Former newspaper publisher and University of Michigan Regent Phil Power is a longtime observer of Michigan politics and economics. He is also the founder and president of The Center for Michigan, a nonprofit, bipartisan centrist think-and-do tank, designed to cure Michigan’s dysfunctional political culture. He is also on the board of the Center’s Business Leaders for Early Education. The opinions expressed here are Power’s own and do not represent the official views of The Center. He welcomes your comments at ppower@thecenterformichigan.net.

 

Comment Form

Add new comment

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.

Comments

JoeBlog
Tue, 12/20/2011 - 8:24am
He "got away with it" because with traffic down 40% from its peak, the DRIC bridge was NOT financially viable and would have cost Michiganders billions over its 50-100 year P3 term. No one could dispute that and so no one could counter the accurate data presented by the Bridge Company experts! Most have already conceded that Moroun has won, even Canada as a recent Toronto Globe and Mail story demonstrates, and they are just waiting to see how Snyder backs off to save face. After all, it's the right thing for Snyder to do now if he wants jobs and trade for Michigan.
Mike R
Tue, 12/20/2011 - 12:49pm
Mr. Power is correct, and Joeblog has simply bought into the Moroun disinformation campaign obviously without performing any fact checking, or even rudimentary analysis, of his own. No, bridge traffic is not now and never has been down "40%", at least not the commercial traffic that really pays the bills. If Moroun's claims were in any way true, do you think the Canadians would be willing to put up $500 million? At the risk of stereotyping, they are not know nto be stupid, frivolous, gamblers. And no, all independent sources projected that the bridge not only would not cost Michigan anything in either the near or long term, it would have been a cash cow AND a job creator for the next fifty or more years. It's attitudes and ignorance like Joeblog's that allowed Moroun to perpetuate his monopoly/stranglehold on international commerce in Detroit (not to mention a complete lack of ethics on the part of legislators). We can only hope that the Canadians are patient enough to wait until we take back our government from the apparent thrall in which Moroun, and others like him, hold it.
JoeBlog
Tue, 12/20/2011 - 7:11pm
Sorry to burst you bubble but... Regretfully Canada is not putting up a penny. The offer letter for the $550M is nothing more than a non-legally binding Letter of Intent with so many loopholes in it that allows Canada to walk away even AFTER Michigan has passed the P3/DRIC Bill that Canada needs. The Transport Canada reps at the Lansing hearing confirmed that no money yet had been allocated to the DRIC bridge project. As former Canadian Transport Minister Strahl said in Parliament: "That was a good question, Mr. Speaker. How much money are we going to spend on the new Windsor bridge? We are going to spend zero taxpayer dollars....It will not have a single dollar in it." The people who understand P3 financing are the foreign P3 operators. Most of them who responded to the MDOT RFPOI needed government guaranteed availability payments because they were concerned that the DRIC project was NOT financially viable because of the lack of traffic.
Thomas W. Donnelly
Tue, 12/20/2011 - 5:10pm
What portion of Detroit's shortfall is due to reduced revenue sharing from the State of Michigan? It is unfair to reduce funding to a great city by several millions and then backhand the same city for being short in the budget. If I am not mistaken, there was a time when a person qualified for a pension by contributing to a pension fund or by having contributions made to the fund as part of a compensation package. The funds would be invested and result in a pot of money to pay the pension of the individual. Sometime in the late eighties, Michigan chose to spend a large amount of the saved up pension funds and initiate a "pay as you go" system of appropriating money from a current budget to pay the guarenteed pension obligations. This was a conscious decision by John Engler and the legislature in office at the time. Did anyone, anyone at all, look down the road into the future to see that "pay as you go" would become unsustainable? Health care costs basically charge those who have insurance with stiff charges, in part to make up for the cost created by the uninsured.It is no wonder that rates are so high. Litigation has increased health care costs. I'm afraid that the citizens of the City of Detroit will pay for the screwups and corruptions of past leaders. Some creative fresh thinking is needed to formulate a good game plan. I wish them well!