Back to the Future: 10 Years of SOS in Michigan

Friday, July 1, 2016

It’s Official- Michigan is Bankrupt!

AP: Lansing, Michigan

In an event unprecedented in American history, the Governor of Michigan, Marian Malcolm, announced today that Michigan is bankrupt and has been taken into receivership by the Federal government. She announced that all state offices would close at 12:00, noon, and could not say when, or if, they would reopen.

In the press conference following her announcement, her voice breaking with emotion, Governor Malcolm said it was the saddest day of her life. She spoke about the bipartisan efforts that she and the legislature had made to prevent this disaster, but that their hands had been tied by a constitutional amendment known as SOS. SOS, an acronym for Stop Over–Spending, had been approved by Michigan voters in 2006 as a tax-reduction amendment. The amendment had been sponsored by various out-of-state groups, and had been modeled on a similar amendment passed by Colorado voters in 1992.

When asked how a ten-year-old law could affect finances now, and that some people had said she was looking for a scapegoat for her administration’s inability to turn things around, Malcolm bristled. Sounding like the college professor she had been before entering politics, Malcolm explained that the amendment did not impose spending limits on the government, but rather limited government income from taxes. This reduced the government’s ability to maintain the educational system or social services, or set money aside in case of economic downturns such as the one that hit Michigan in 2014.

She said that what the SOS supporters did not tell Michigan voters in 2006 was that when Colorado voted for the amendment in 1992, that state was experiencing one of the highest economic growth rates in the country. In 2006, when Jennifer Granholm was governor, Michigan was reeling from a 7-billion dollar deficit that was the legacy of the Republican governor, John Engler, as a result of 32 tax cuts he and the Republican-controlled Congress had foisted on the public.

Further, she said, the SOS supporters also did not tell Michigan voters that by 2006, Colorado’s economy and social services had slipped to the point that the state could no longer afford to pay for childhood vaccinations for its youngest citizens; the state’s higher education system had faltered and tuition had jumped 21 percent, and businesses were leaving the state because the environment, social services, and “quality of life” were making them unable to recruit or retain employees. Matters had grown so bad, she said, that the Colorado legislature suspended the TABOR law for 5 years so the state could recover economically, which it eventually did, but not for almost eight years. For Michigan, the suspension would have come too late to make any difference. Governor Malcolm abruptly ended the press conference and left for a series of meetings with federal auditors.

In a related story, Grover Norquist, head of Americans for Tax Reform, held a press conference about Michigan’s bankruptcy, and stated he was delighted that the government of Michigan had succumbed. He said that his organization, along with several other national anti-tax organizations, had targeted Michigan in 2006 as the most vulnerable state for just such a fate. “It was only a matter of time once the taxpayers had approved the constitutional amendment,” he said. “Starving the beast has led to its eventual demise. The government of Michigan is effectively dead; now the businesses in Michigan–and the people, of course–can live free of the burden of taxes. You’ll see: in twenty years, Michigan’s economy will be completely service-oriented. Wages will be so low that jobs that are being out-sourced to other countries will flow back home to Michigan. Michigan will become a leader for cheap labor: it will be the China of the Great Lakes. God bless American enterprise.“