As I noted last week, every Thursday between now and the election I will lay out one piece of a comprehensive economic strategy to get Michigan back on track and get our people back to work. Today, I’m starting with the basics – the importance of getting the fundamentals right.

Fundamentals are important.  While every 4th grader wants to learn how to run the fancy “Statue of Liberty” play in Pop Warner football, it’s the blocking and tackling that wins games.  Same thing for Coach Dale’s “four-passes-before-you-shoot” rule in Hoosiers.

When it comes to the economy, the fundamentals include fiscal discipline to encourage investor confidence; establishing a fair, competitive and predictable business environment; and making targeted investments in human capital – especially in education – to create the globally competitive workforce necessary to compete in today’s knowledge economy.  These aren’t the sexy, headline-grabbing announcements that politicians love; rather, they represent the nuts-and-bolts, behind-the-scenes hard work necessary to spur long-term economic growth and create jobs now.

The importance of fiscal discipline from government as a necessary precondition for overall economic growth cannot be overstated.  As Gene Sperling, a former National Economic Advisor, notes, “fiscal discipline creates confidence that helps maintain sustainable growth that in turn leads to more income, more revenue, and lower deficits – the so-called virtuous cycle.”  The increased investor confidence in a state’s credit worthiness that results from fiscal discipline also lowers the cost for the state to borrow money, which allows the state to do more with tax dollars when making important public investments.  On the flip side, fiscal recklessness and budget gimmicks have the reverse effect, a lesson we in Michigan learned all too well just two years ago.  As I have noted on multiple occasions, the Republicans who controlled the State House in 2006 chose the day after the August primary to vote to eliminate the Single Business Tax.  Here’s the problem: with no indication of how they would bridge the $1.9 billion hole in the state budget that move created (either through specific cuts or a specific proposal to replace the lost revenue), ratings analysts at both Fitch’s and Standard and Poor’s downgraded Michigan’s credit rating the very next day.  This increased the cost of public investments and made Michigan less attractive to private investors as well.  As State Representative, I will consistently oppose proposals that would put partisan advantage over the fiscal discipline we need from state government to turn our economy around.

To create a fair, competitive and predictable business environment, we need to strike a positive balance between taxes, regulations and long-term investments that will make Michigan an attractive place to do business in a global economy.  There is no doubt that business taxes are a central element of a competitive mix, and the recent Small Business Barometer from the Small Business Association of Michigan showing just 9% of Michigan small business owners feel that the level of business taxes is appropriate shows we have a lot of room for improvement in this area.  In addition to competitive business tax rates, business owners need predictability in what their tax will be (an issue I will deal with in more detail in a couple weeks).  Uncertainty kills business; the only thing worse than having a high tax bill is not knowing what your bill will be.  In addition, we need to review our regulatory framework to find the least burdensome alternative to businesses in protecting the people and places of Michigan.  We all can name regulations that don’t make sense, and simply continuing with some of these because it’s the way it’s always been done just isn’t good enough anymore.  I will work to streamline regulations while promoting health and safety to allow businesses to thrive.

Finally, we need to invest in Michigan’s people to ensure we have the globally competitive workforce necessary to compete.  These public sector investments are just as important to Michigan’s long-term economic prospects as creating a positive environment for private investment.  As former Secretary of Labor Robert Reich points out, “public investments in education, health care, transportation, and the environment are complements to private investments.  Businesses can’t be highly productive unless their employees are highly productive.”  Number One on this list is education, from pre-school to college.  Furthermore, it is the business community that is making the case for increased spending on education.  In a speech to the Michigan Chamber of Commerce last year, Knight Kiplinger, the editor-in-chief of the Kiplinger Letter, said that the state must “Invest heavily” in education to compete.  Others have called for increased investment in early childhood eduction, including Gene Sperling, the former National Economic Advisor mentioned above, whose book The Pro-Growth Progressive: An Economic Strategy for Shared Prosperity includes a chapter titled “Take Universal Preschool Seriously, Please.”.   We also need to do much more to invest in higher education as called for by the Lt. Governor’s Commission on Higher Education and Economic Growth in 2004.  Unfortunately, Michigan continues to lag in this area, putting our economic competitiveness at risk.  A recent report from the Grapevine Project shows that Michigan ranks dead last – 50th out of 50 – in terms of state tax appropriations for higher education.  As State Representative, I will work to boost Michigan’s competitiveness through increased investment in higher education.  With an educated and skilled workforce a necessary condition of entry into the global knowledge economy, we need to recognize investment in education at all levels as a fundamental part of spurring economic growth in Michigan.