Granholmnomics is already the national model (12.11.10)

Posted by hpayne on December 12, 2010

After leading Michigan through a lost decade and her party to a resounding defeat on November 2, Governor Jennifer Granholm wants America to know that history will smile on her legacy. In a post-election public relations offensive, Granholm last week proclaimed herself a visionary who has built the foundation of a “Green Belt” economy in Michigan that should be implemented nationally.

It already has.

“If you want your country to look like Michigan, then elect Barack Obama,” Michigan Senate Majority Leader Mike Bishop warned Presidential-candidate John McCain in 2008 – explaining how Obama intended to follow the Granholm economic model of public stimulus and green tech subsidy.

Indeed, since taking office in 2009, Obamanomics has mirrored Granholmnomics with the same disastrous results: a stalled economy and a historic election defeat that gave a mandate to Republicans to reject European market socialism. In a defiant Detroit News interview and an op-ed article for both The Huffington Post and Politico, Granholm urges Michigan and America to stay the course.

Obama and Granholm are natural allies. Both are attractive, charismatic Harvard-trained lawyers with no experience in business, a missionary’s belief in spreading global warming gospel, and a zeal for green tech.

Convinced that Michigan must play a central role in their utopian vision of a post-carbon America, Obama recruited Granholm to lead a discussion of the “new economy” at the 2008 Democratic Convention and then tapped her expertise again for his economic policy team upon entering the White House in 2009.

The subsequent similarities between Obamanomics and Granholmnomics are striking. Compare, for example, Granholm’s January, 2008 State of the State address with an Obama campaign speech later that same year.

Granholm:

“I’m proposing a Michigan economic stimulus package — nearly a billion dollars for needed infrastructure and building improvements. But let me talk for a moment about one sector that has blockbuster potential for Michigan: alternative energy . . . . Because of the need to reduce global warming and end our dependence on expensive foreign oil, the renewable energy and energy efficiency industries will create millions of good paying jobs. I say we will win these jobs for Michigan and replace the lost manufacturing jobs with a whole new, growing sector.”

Obama:

“(My stimulus plan) will be a two-year, nationwide effort to jumpstart job creation in America and lay the foundation for a strong and growing economy. We’ll put people back to work rebuilding our crumbling roads and bridges, modernizing schools that are failing our children, and building wind farms and solar panels, fuel-efficient cars and the alternative energy technologies that can free us from our dependence on foreign oil and keep our economy competitive in the years ahead.”

Central to Granhobama economics is the belief that government should pick economic winners and losers – devoting public resources to investing in politically-favored, green companies.

In her HuffPo article, Granholm pretends that Michigan has been a “laboratory” and that “Washington can take a lesson from what is happening in Michigan,.” In fact, Granholm’s state vision has been entirely dependent on federal largesse – a fact that she later admits, writing that “we pancaked our state incentives on top of the competitive federal Department of Energy grants to advanced battery companies and suppliers.”

True to Obama’s 2008 speech, he has devoted stimulus money to feed his – and Granholm’s – new economy vision. “The American Recovery and Reinvestment Act of 2009 —Obama’s $787 billion stimulus — has been marketed as a jobs bill (that) has obscured its more enduring mission: a long-term push to change the country,” reveals Time Magazine’s Michael Grunwald.

“One-sixth of the total (stimulus) cost,” writes Time, “(this) is an all-out effort to exploit the crisis to make green energy, green building and green transportation real; launch green manufacturing industries.” In a “trickle-up” transfer of wealth from taxpayers to rich corporations, billons in federal dollars have gone to GM, Ford, South Korea’s LGChem, A123 Systems and other Big Green firms in Michigan – and other states.

“We need a moon shot – a Jobs Race to the Top,” writes Granholm. “Race to the Top” meet “21st Century Jobs Fund” – an identical, $2 billon state plan she put in place in 2006 in Michigan to award green companies with public funds (of 505 applicants, 67 won Michigan’s “race to the top” in the program’s first year).

“In five years, you’re going to be blown away,” she said in 2006. But five years later, Michigan’s unemployment rate has doubled. This time, she’s moderated her rhetoric to a national goal to “create three million new jobs in three years.”

Obama has followed her model to the letter – right down to the moon shot analogy. “We’re taking chances, because that’s how you put a man on the moon,” says the Energy Department’s Arun Majumdar about federal funding of grid-scale storage, solar energy and other green technologies are too costly to compete without subsidies.

The result? Like Michigan, the economic recovery since the recession ended in mid-2009 has been slow compared to past recoveries.

Though economically obtuse, Granholm’s article gives a glimpse into her – and her White House ally’s – sheer audacity.

“Here’s how it works,” she says. “Take funds the U.S. now spends on economic development programs (about $170 billion). Focus the competition on clean energy job creation. Devote the competition to rewarding the most effective public-private partnerships. (For example) state governments might give incentives for solar energy production.”

More humble policymakers would just return that $170 billion to the private sector. But Granholm and Obama want to be like private investment bankers making investment picks (turning government “into the world’s largest venture-capital fund,” says Time). The difference being that investment in their tax-funded venture is mandatory and does not have to produce financial results!

What happens when the subsidies run out? Just as Granobama have looked to Europe for inspiration, look to Europe for the fallout. In total financial collapse due to pursuing its reckless Greenomics, Spain is gutting the subsidies that have propped up its green experiment.

Granholm claims she (and Obama) have created the foundation for a new economy. But it is a model built on the quicksand of government subsidy.

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