Question 1): Last Thursday, the Michigan House of Representatives approved a wide-ranging plan to lower taxes for lower-income workers and retirees and funnel more money into business “incentives.” The Democrat-sponsored legislation also includes a $180 onetime check for Michigan tax filers. But that could be in jeopardy if Senate Republicans block the legislation from taking effect immediately, a vote that could happen tomorrow (Tues.)
Over strong protests from House GOP lawmakers, the deal passed 56-53 without debate. Rep. Mike Mueller (R-Linden), was the lone Republican to join Democrats in support, while Rep. Dylan Wegela (D-Garden City), opposed the bill. Otherwise, every Democrat and every Republican voted the “party line.”
The legislation now heads to the Senate, where Republicans could make or break the tax rebates. As written, the checks would go to state filers if the bill is signed and takes effect by April 18. That means at least six Senate Republicans would need to support it to meet the 2/3 threshold required for Immediate Effect (IE), if that means anything anymore. If IE doesn’t happen, the bill can’t take effect until early next year, defeating the purpose of obtaining “instant relief” NOW.
The bill, numbered House Bill 4001, would phase out taxes on public and private pensions and expand the state’s Earned Income Tax Credit (EITC) to 30 percent of the federal rate, up from 6 percent. The tax expansion would save about 700,000 families some $600 per year, while 500,000 seniors would save an average of $1,000 from the pension tax.
Both of those tax cuts had bipartisan support when they were approved earlier in the session in a different vote, but provisions to use $800 million to fund onetime $180 checks and spend $600 million in ongoing economic development (dubbed “corporate welfare” and “picking winners and losers” by its detractors) are far more controversial.
One upshot of the Democratic deal is that it would apparently negate an income tax rollback that otherwise would have been triggered by state general fund revenue growth in fiscal year 2022, which ended last Sept. 30.
The state’s income tax rate is evidently set to drop to 4.05 percent from 4.25 percent (there’s disagreement even about this). That would save filers who make $100,000 about $210 every year and those who make $30,000 about $60 per year.
What will be the outcome of this early explosive confrontation between majority Democrats, who hold narrow, two-seat majorities over Republicans in both chambers? If HB 4001 becomes law, is it good policy? And does either side hold an advantage in “messaging” its argument, pro or con, for political purposes?
Answer 1): Two aphorisms come to mind — “Never take points off the board” and “A lie gets halfway around the world before the truth can get its pants on.” Republicans emphasize the former, especially since it was THEIR signal accomplishment back in 2015 when majority GOP lawmakers and then-Gov. Rick Snyder enacted an automatic roll back of the state income tax from 4.25% to 4.05% if state revenue swelled to a certain high level, whenever that might happen. Well, it’s happened as of the end of the last fiscal year on Sept. 30, 2022. In other words, broad-based, across-the-board tax relief is about to kick in automatically without the legislature doing anything at all. The points are on the board for Michigan taxpayers! BUT WAIT! Gov. Gretchen Whitmer and legislative Democrats now want to take it all away and substitute a puny $180 one-time “rebate” check to each Michigan tax filer, plus create a giant $600 million “slush fund” that faceless state bureaucrats can use to pick what they think are “winners” in the perpetual War over Economic Development with other states. Wait a second — that’s a LIE, say Whitmer and the Democrats. What’s really happening is that frustrated Republicans are trying to block a bill that will help lower-income families, public employees, and pensioners of all stripes just because the GOP is angry that their 2015 scheme to cut Michigan’s flat rate tax is being scuttled. By the way, a drop in the flat rate tax (a tax that Democrats have always opposed) means billionaires like “Betsy DeVos” (always the Democrats’ favorite whipping girl) will be able to get a far bigger tax break (in dollars, not percentage) than anyone in “working families.”
Oh, by the way, there will also be the question of whether Senate Democrats will “pull the trigger” and attempt to change Senate rules to abolish a roll call vote for IE on HB 4001. This is akin to the perennial debate in Washington, D.C., over whether to invoke the “nuclear option” and abolish “cloture” in the U.S. Senate, which Democrats badly want now that they control the chamber. In Michigan, Senate Democrats could abolish a roll call vote on IE on HB 4001 and simply “gavel it through” with Lt. Gov. Garlin Gilchrist (D) at the controls and “not seeing” the obvious presence before him on the Senate floor of far fewer than 2/3 Senators AGAINST IE. That’s how the House has been doing business for years, no matter which party was in control of the chamber. This will all be appealed in court, but the gutless judiciary will once again rule that “It’s not our decision to make. We will not intrude on the right of the Legislative branch to make its own rules.” Remember, the judiciary doesn’t want to make legislators mad — after all, legislators set and control the salaries of judges and justices.
Question 2): The Michigan Republican Party faces huge challenges heading into its Feb. 17-18 state convention at the Lansing Center. The most important test of all will be picking a new chairperson. There are 11 eligible candidates but no clear frontrunner, although attorney Matt DePerno, the GOP nominee for Attorney General last fall, has secured the endorsement of former President Donald Trump. Kristina Karamo is hot on his heels — she was the party’s failed nominee for Secretary of State last year. Maybe Scott Greenlee is the only hope of delegates who would like to see someone who has actually succeeded in raising campaign cash and electing people. So, what will happen? And does it matter?
Answer 2): In historical terms, whoever is elected chair will join an illustrious group, which includes future and former governors, U.S. senators, attorneys general, and federal and state justices and judges. 46 men and women have served, four of them in split terms like the current outgoing chairman, Ron Weiser. One “split-termer,” Gerrit J. Diekema of Holland, served from 1900-1910 and then, roughly two decades later, came back to serve again from 1927-29.
For instance, in the 1980s a troika consisting of state Senate Majority Leader John Engler, National Committeeman Pete Secchia (a strong fundraiser), and chairman E. Spencer Abraham ran the show, with major finance help from Randy Agley, Heinz Prechter, Jim Nicholson, and Mike Kojian. About the same time, National Committeewomen Andrea Fischer Newman and Ranny Riecker also could raise dough.
Later, chairs who were personally wealthy like Betsy DeVos, Bobby Schostak, and Weiser could contribute large sums of campaign cash themselves, and they could raise money from major donors, too.
What if a chair was a great organizer but wasn’t personally wealthy, which was more often the case than not? They had to turn to the moneymen to get the job done — that’s what Elly Peterson, the party’s first female chair (1965-’69), did with the help of financier Max Fisher and oilman Harold McClure. More recently, U.S. Rep Dave Camp was a strong fundraiser in Michigan’s Congressional delegation during his many terms in office.
There are other ways party leadership can manifest itself without a big title. Onetime executive directors like Bill McLaughlin, Jerry Roe, Doyle and, more recently, Gary Reed, Kim Jorns, and Greg McNeilly fit that description.
Of course, when a political party holds the governor’s office, usually whoever is the governor picks or heavily influences the selection of a chair. Thus, Governors George Romney (with Peterson), Bill Milliken (with McLaughlin and former Rep. Mel Larsen), and Engler (with Doyle, DeVos and Rusty Hills) could depend on someone as chair with whom they were comfortable. Rick Snyder was an exception — he allowed the party to operate pretty much independent of his predilections, although Weiser obviously exercised a lot of influence on the governor at the time of the enactment of the state’s first Right to Work law in 2012.
But what happens when there is no Republican in the governor’s office and, for that matter, in few other state offices as well — like now? That presents the chair with a daunting task, much as Larry Lindemer faced in the late Fifties. A little later, Elly Peterson had Romney in the governor’s office, but that’s all she had after the GOP was wiped out elsewhere in the 1964 election by Lyndon Johnson’s landslide win over Barry Goldwater. Peterson turned it all around in 1966 when the Republicans knocked off a former Democratic governor (Soapy Williams) to win a U.S. Senate seat, unseated five incumbent Democratic Congressmen, ousted a Democratic Supreme Court justice, regained control of both the state House and Senate which they had lost two years before, and swept the statewide education board races.
The way Peterson did it was by bridging all the factions of the state GOP to get everybody singing from the same hymnal as they faced a common opponent —the Democrats. Last year, it was obvious to anyone following Michigan politics that the Republican fundraising wing was estranged from other elements of the party, who spent much of their time and energy disparaging the major sources of financial aid they desperately needed to win. Already, the most recent figures on fund-raising indicate the “donor class” is deserting the Republicans in the wake of the ’22 election. If the GOP doesn’t correct this in a hurry, it’s in permanent trouble.
Putting Humpty Dumpty back together again is a tall order, but the next GOP chair should realize, when looking at the honor roll of past chairs, that it can be done.