: Full coverage Next Issue The Newsletter of the Mackinac Center for Public Policy www.mackinac.org summer 2010 of the Overton Window A Mackinac Center concept that inspired a best-selling novel. Charging Service Taxes

t the beginning of 2010, the state services. This measured rhetoric and conventional wisdom in Lansing the state's pressing budget shortfalls lent Aseemed sober and self-evident: The these arguments an air of inevitability. state had for many dark Then along came James Hohman, who months single-handedly crumpled every pillar of balanced the budget on the intellectual support for the pro-tax arguments. backs of teachers and state At the same time, the Mackinac Center fiscal employees while holding the line policy analyst helped Morey Fiscal Policy on taxes. It was time now — and Director Michael D. LaFaive spearhead a only fair — to levy a modest tax withering attack on a series of economic on services that would address development claims by state government the inequities of an antiquated meant to create the illusion of a friendly state state tax structure and spare the business climate. This second line of attack public another brutal round of cuts to against tax-hike apologists made inroads: see “Service Taxes” Page 6

Punching Bag’ Myths Pummeled

ichigan’s economic decline is starting Working with Communications Specialist Kathy to affect public school budgets, Hoekstra, Van Beek responded to these misleading andM over the past few months, education ads with a video fact-check. By analyzing each claim lobbyists, led by the Michigan Education in the MEA ads, Van Beek was able to expose the Association, have invested their considerable elements that were misleading, partially true or just resources in a public relations barrage plain false. (The video can be found on the Center’s calling for tax hikes. But Center Education website at www.mackinac.org/12928.) Contents Policy Director Michael Van Beek has deftly Misleading claims, especially when repeated parried every blow, deploying a wide range often enough, can evolve into widely accepted myths. 2 President’s Message of Mackinac Center research into an ad To combat this tendency in the education funding 3 Tea Service campaign full of half-truths and myths. debate and to promote better-informed dialogue, 3 Cap-and-Trade Grade: F The MEA purchased significant television Van Beek began authoring an ongoing series of 7 Radio Free Michigan and radio airtime around the state for ads articles that explore issues like how much revenue 8 An Encouraging Word making an emotional appeal in the school schools actually receive, the stability and equitability 9 Day Care Union — funding debate. The ads, which exclaimed of school funding over time and how much school And Coalition that “enough is enough” and complained employees have “sacrificed” on behalf of taxpayers. 10 Our Economics that politicians are “beating up on teachers The School Funding Myths can be found at Knowledge Deficit like punching bags,” were full of misleading www.mackinac.org/12610. 10 Henry Payne Cartoon statements and unverifiable claims. It’s likely Van Beek’s expertise on funding and other 11 Free-Market Library they were designed as part of the MEA’s plan to education issues was in demand. Over a four-month 12 Joining the Media build support for the creation of a service tax period, he was invited to address the State Board to Defend FOIA and the institution of a graduated income tax. see “Punching Bag” Page 4

“Want to know why Michigan can't make even the most common sense changes in the face of a budget crisis that is taking it toward bankruptcy? Read Mackinac Center analyst Jack McHugh's report on how public employee unions are effectively blocking modest spending reforms at www.MichiganCapitolConfidential.com. It's a disgusting eye-opener.” www.mackinac.org www.mackinac.org Summer SpringNolan 2010 Finley (The1 Mackinac Detroit News), Center April IMPACT 16, 2010 President’s Message Board of Directors D. Joseph Olson, Chairman Phil F. Jenkins Retired Senior Vice President Chairman, Sweepster Inc. and General Counsel, Amerisure Companies R. Douglas Kinnan A Novel Idea: Mackinac Center Senior Vice President and CFO, Joseph G. Lehman, President Amerisure Insurance Mackinac Center for Public Policy Edward C. Levy Jr. Concept Tops Best-Seller List Joseph J. Fitzsimmons President, Edw. C. Levy Co. Retired President, University Microfilms Rodney M. Lockwood Jr. President, Lockwood y late friend and colleague Joe Overton understood Dulce M. Fuller Construction Company, Inc. Owner, Woodward and Maple Joseph P. Maguire the power of ideas to change public policy. Change Hon. Paul V. Gadola President, M Retired U.S. District Court Judge Wolverine Development ideas, he recognized, and you change the range of options Corporation Kent B. Herrick available to policymakers. That’s why he devoted his President and CEO, Thermogy Richard D. McLellan Attorney, McLellan Law Offices Richard G. Haworth career to the think tank business rather than politics. It’s Chairman Emeritus, Lawrence W. Reed Haworth, Inc. President Emeritus, also why a book titled with his name rose to No. 1 on The Mackinac Center for Public Policy Joseph G. New York Times best-seller list last month. Lehman Board of Scholars President The journey to the best-seller spotlight began Dr. Donald Alexander Dr. Dale Matcheck more than a decade ago with Joe’s subtle explanation Western Michigan University Northwood University of think tanks’ real but indirect influence on policy. Joe wanted to Dr. William Allen Dr. Paul McCracken Michigan State University University of Michigan (ret.) describe how think tanks like the Mackinac Center affect policy even Dr. Thomas Bertonneau Charles Meiser Writer and Independent Scholar though they don’t vote in the legislature and they typically don’t lobby Lake Superior Dr. Brad Birzer State University (ret.) or command legions of activists. So he devised a model of policy Hillsdale College Glenn Moots Dr. Peter Boettke Northwood University change he called the Window of Political Possibility. George Mason University Dr. George Nastas III As far as lawmakers are concerned, there are only two kinds of ideas: Dr. Theodore Bolema Marketing Consultants Anderson Economic Group Dr. John Pafford those that are inside the window of political possibility, and those that are Dr. Stephen Colarelli Northwood University outside. Ideas inside the window are acceptable to the electorate. Support Central Michigan University Dr. Mark Perry Andrew Coulson University of Michigan - Flint those ideas and gain (or keep) your constituents’ support. Ideas outside the Cato Institute Gregory Rehmke Robert Crowner Economic Thinking/ window are perceived as unacceptable to voters. Advocate those ideas and Eastern Michigan University (ret.) E Pluribus Unum Films risk being replaced at the next election. Dr. Richard Cutler Dr. Steve Safranek University of Michigan (ret.) Ave Maria School of Law This much is common sense, but Dr. Jefferson Edgens Louis Schimmel Jr. Mackinac Center for Public Policy Joe saw how the window actually shifts Morehead State University Dr. David Felbeck Dr. Howard Schwartz over time along a range of ideas to University of Michigan (ret.) Oakland University Dr. Burton Folsom James Sheehan encompass new policies and exclude old Hillsdale College Deutsche Bank Securities ones. If public policy ideas are arranged Dr. Wayland Gardner Rev. Robert Sirico Western Michigan University (ret.) Acton Institute for the on a scale from top to bottom, with little Study of Religion and Liberty John Grether Northwood University Dr. Bradley Smith government interference at the top and Capital University Law School Dr. Michael Heberling a lot at the bottom, the window will slide Baker College Dr. John Taylor Grand Valley State University up and down depending on whether society accepts limited government or Dr. Ormand Hook Mecosta-Osceola Intermediate Dr. Richard K. Vedder expansive government. School District Ohio University Robert Hunter Prof. Harry Veryser Jr. The ideas that influence society determine what laws that society will Mackinac Center for Public Policy University of Detroit Mercy accept. When think tanks (and others) develop and promote ideas, they can Prof. Harry Hutchison John Walter Jr. Mason School of Law Dow Corning Corporation (ret.) shift the window of acceptable new laws. Politicians who want to remain in Dr. David Janda Dr. William Wilson Institute for Preventative Economic Consultant office take heed. Sports Medicine Mike Winther After we tragically lost Joe seven years ago, we renamed his model the Annette Kirk Institute for Principle Studies Russell Kirk Center for Dr. Gary Wolfram Overton Window. We trained hundreds of think tank professionals in how it Cultural Renewal Hillsdale College David Littmann works. Political blogs began to buzz with the idea. This inspired popular and Mackinac Center for Public Policy controversial talk show host Glenn Beck to write a political thriller that he titled The Overton Window. Without giving away too much, I can tell you the novel’s bad guy stole his big idea from “a think tank in the Midwest.” When Glenn Beck recently invited me to be a guest on his radio and television programs, we saw it as an opportunity to educate large audiences on the role of think tanks and the power of ideas. My appearances drew more than 25,000 individuals to our dedicated website (www.TheOvertonWindow.com). More than 1,400 of those people asked us to keep in touch with them, and many became financial supporters. At this writing, the Glenn Beck Program intends to air one more segment with me about the Overton Window. Look for more in our next

issue of Impact. I 140 West Main Street, P.O. Box 568, Midland, Michigan 48640 989-631-0900, Fax 989-631-0964 See videos of Joseph Lehman www.mackinac.org [email protected] on the Glenn Beck Program at www.mackinac.org/OvertonWindow#Video1. Mackinac Center IMPACT is a quarterly publication of the Mackinac Center for Public Policy, a nonprofit, nonpartisan, tax-exempt research and educational institute classified under section 501(c)(3) of the IRS code. Michael D. Jahr Editor Daniel E. Montgomery Graphic Designer Mackinac Center IMPACT 2 Summer 2010 www.mackinac.org Mackinac Center Tea Service

t’s not your father’s protest movement. Everyone from small children to military veterans wave the Stars Iand Stripes and the coiled snake of the Gadsden flag, symbols of the Tea Party message: I’m American — so don’t tread on me. But it takes work to turn these broad principles into focused action. As Paul Kersey, Mackinac Center labor policy director, said in speeches to two Tea Party rallies: “Government is so big, so intrusive, and so complicated that you need trained professionals to really grasp how messed up the whole thing is. That’s where we come in.” Thus, on April 15, as Tea Party groups across the nation gathered to protest ever-expanding government and budget deficits, Mackinac Center policy analysts spoke at nine of the “Tax Day” rallies in Michigan to encourage which Tea Partiers then carried proudly in Mackinac and inform the crowds, giving them the tools to make a Center “Freedom makes all the difference” bags. real difference. Emphasizing the importance of keeping politicians Center staff were also on hand at these and many accountable, Center speakers focused on the central more rallies across the state to distribute thousands question of how to limit government. Each alerted the of copies of such Mackinac Center publications as crowds to many examples of “misbehavior” on the part Michigan Capitol Confidential, “Tea Party Toolbox” and of Lansing politicians and told them the best way to keep “101 Recommendations to Revitalize Michigan” — see “Tea Service” Page 5

Dr. Thorning: How Cap-and-Trade Would Harm Michigan

ichigan’s already fragile • Household electricity prices could economy would be further be 60 percent higher than they injuredM if Congress approves cap-and- would be otherwise. trade legislation to regulate carbon Thorning said all of this would emissions, a noted speaker explained occur with virtually no environmental at a recent Mackinac Center Issues & gain. “Government agencies Ideas forum. Margo Thorning, senior advising the president,” she wrote vice president and chief economist in The Detroit News, “have already at the American Council for Capital acknowledged that an America- Formation, outlined her findings in Dr. Margo Thorning addresses a Lansing only emissions cap will not make late April at a Lansing I&I luncheon audience at an April Mackinac Center Issues meaningful global reductions in titled “Global Environmental and and Ideas forum. greenhouse gas concentrations.” Economic Challenges.” • Annual state transportation Thorning, who also served in Earlier that day, Thorning was a guest the U.S. Department of Energy, said on “The Frank Beckmann Show” on WJR manufacturing alone would fall by 9 percent. potential solutions should include AM760 radio, and she later summarized improving the U.S. tax code to reduce her research in an Op-Ed that appeared • State gross domestic product the cost of new, cleaner technology; in The Detroit News. The Michigan- would decline by between promoting market reforms to allow specific findings that Thorning discussed $12 billion and $16.5 billion. the developing world access to cleaner in all three venues are startling. By 2030, energy; and using nuclear power for • Annual employment would a national climate change bill would electricity generation. decrease by 66,700 to 90,800 jobs. impact Michigan in the following ways: A video of Thorning’s presentation is • Annual state manufacturing • Annual disposable household posted at www.mackinac.org/13088, and output would decrease by between income would fall an average a transcript of her speech will soon be 5.4 percent and 6 percent. of between $883 and $1,435. posted at www.mackinac.org/12867. I

www.mackinac.org Summer 2010 3 Mackinac Center IMPACT 'Punching Bag' from Page One

of Education, the House Committee attempt to discredit the analysis, but failed on Education (twice) and a group of to point out any errors. about 200 administrators and school In addition to running these analyses board members at Saginaw Valley State in local newspapers, the Center is using its University. At each event, he presented own online media outlet, Michigan Capitol ideas for ways Michigan schools could Confidential. Each contract analysis is trim their budgets and better weather posted at www.michcapcon.com, and these the state’s new fiscal condition. Most of explanations are among the most popular the time, Van Beek was alone in calling articles on the site. for more fiscal responsibility as opposed One reason for their popularity Check for Van Beek's latest myth-busting to tax hikes. At the House Committee is that they describe in detail all at www.mackinac.org/12610. on Education, MIRS reported that “Van the different ways that teachers are Beek ran into a buzz saw of contentious compensated, including the single salary are constantly updated on the Center’s questions,” but “he stuck to his guns.” schedule, health insurance benefits, site, and contracts from all 551 school pension program, working hours and districts are available in a searchable additional pay for extracurricular database. To date, the web page that duties. Much of the information is provides access to these contracts eyebrow-raising, especially the cost remains among the most visited pages of teacher health insurance plans and on the Center’s website. how little teachers contribute to their Another myth that lingers in the own premiums. Both The Detroit school funding debate is that teachers News and Detroit Free Press wrote are underpaid. Van Beek released

Van Beek and Hoekstra's "Knockout Punch" editorials about the need to reform this a report regarding average teacher video exposes false claims in a statewide MEA aspect of school spending based on this salaries that significantly challenges ad campaign. See www.mackinac.org/12928. information. The Free Press challenged this notion. His findings garnered the MEA to accept “more realistic substantial public attention. In an effort to bring the broader health plans” for teachers, “instead of Compiling data from the National discussion of education funding to a standing by watching school districts Education Association and the Bureau local level, Van Beek in March began gut critical services to kids.” of Economic Analysis, Van Beek showed evaluating specific districts’ teacher Another reason for the contract that the average teacher salary in contracts. The project’s aim was to help analyses’ popularity is that they enable Michigan was the highest in the nation local districts become more fiscally many residents to actually understand from 2003 to 2009 when taking into responsible and make local school school districts’ spending. These account a state’s per capita personal spending more transparent. contracts are laden with legalese, so a income. Essentially, Michigan pays its About 70 percent of local districts’ plain-English translation allows anyone teachers well considering overall state operating budgets are consumed by to understand the contract’s provisions. wealth. The Detroit News, Battle Creek compensation for teachers, and every For instance, by just reading through Enquirer, Livingston Daily and Midland detail of this compensation is dictated the contract, few people would pick Daily News, among others, reported on by collective bargaining agreements. up on the fact that the Warren school these findings. This Teacher Contract Analysis project district pays the local union president As Michigan continues to drive dissects these contracts on a district- the highest possible contractual salary businesses, residents and, ultimately, by-district level and reports the results with full benefits for not teaching a tax revenues out of the state with its through a multitude of media outlets. single class — the union president tax, labor and regulatory environment, Union contract analyses have appeared has full release time to conduct union arguments will continue over how in a number of newspapers and were the business. But Van Beek’s analyses bring to deal with rising school costs and subject of a story by Lansing’s WILX-TV. such details into the light. shrinking school revenues. A variety of The analysis of the Utica school district, The success of these contract projects driven by the Mackinac Center’s the second largest district in the state, was analyses is made possible by the Center’s Education Policy Initiative are helping published in The Macomb Daily on May 9. ongoing transparency effort. For the last shape this debate. Arming voters and Days later, the local teachers union agreed three years, the Mackinac Center has policymakers with fact-based, plain- to a new contract that saved the district been hosting the state’s only publicly English analyses the Center is aiming to $6 million in concessions. The local union available online database of school make sensible and responsible school president wrote a letter to the editor in an employee contracts. New contracts spending reforms a reality. I

Mackinac Center IMPACT 4 Summer 2010 www.mackinac.org Tea Service from Page Three tabs on what their representatives are up to: reading the and told of the many tools the Mackinac Center offers Mackinac Center’s daily news site, www.MichCapCon.com. to help individuals stay informed: Daily political Kathy Hoekstra, Mackinac Center communications news (MichCapCon.com), plain-English descriptions specialist, starred at the rally held on the steps of the Capitol and complete roll call votes of every single bill in the building in Lansing. Speaking to a crowd 1,500 strong, Legislature (MichiganVotes.org), and checkbook Hoekstra pointed out the “bad habits of democracy” — registers from municipalities and school districts that is, the people forgetting to hold their representatives (ShowMichigantheMoney.org). accountable. She encouraged her audience by letting them Mackinac Center Fiscal Policy Director Michael LaFaive know how easy it is to hold their legislators responsible: spoke at a rally in Midland and at the seminar in Lansing. In his speeches, he focused on Michigan’s unemployment “Remember, information is power. Power to and outmigration statistics. These, he said, show the failure break all of these bad habits. That's where the of Michigan’s big-government, high-tax policies and the Mackinac Center can help. When people are need for a new strategy: limited government and tax cuts. trying to quit smoking, some try things like Ken Braun gave a rousing address in Hudsonville. Elliot special gum or patches. For these bad habits Gaiser, a Hillsdale College student who attended and spoke of democracy, the Mackinac Center has your at the Hudsonville rally, commented: “The crowd was very limited government, back-to-basics, free-market enthusiastic and heartily applauded each of the speakers, equivalent of gum and patches!” including Ken Braun. His comments were taken very well. It was remarkable how large the crowd was on a Thursday at Kersey spoke in Hillsdale and Brighton. He highlighted noon for a smaller community like Hudsonville.” the dangers of union special-interest lobbying, explaining That’s the Tea Party movement: thousands of ordinary how public-sector collective bargaining can even override people refusing to let the routine demand of daily life prevent local law and gave the facts on the state’s forced unionization them from rallying against a profligate government. Mackinac of home-based day care providers (see Page 9). Center analysts are offering them practical ways to achieve Jack McHugh, the Center’s legislative analyst, spoke the greatest impact possible. With ideas, energy and know- in Lapeer and Sterling Heights and at a seminar in how, we can help restore America’s founding principles Lansing. He also emphasized government accountability of personal responsibility and limited government. I Center Snapshots

Looking for any easy way to stay on top of all the great news and research coming from the Mackinac Center? This Week at Mackinac — our new weekly digest — will keep you informed Mackinac Center High School Debate Workshop Director Kendra Shrode presents $1,000 scholarships to Luke Anderson and Grace on the issues you care about. Green, both from Lenawee Christian School in Adrian. The students were two of the four winners of the Center’s annual Debate Workshop essay contest. Erik Kraayeveld and Scott Hoelsema of Zion Christian Sign up at wwwmackinac org in Byron Center were the other two winners. Each year, hundreds of students and teachers from dozens of public, charter and independent schools attend the Center’s four debate workshops around the state.

www.mackinac.org Summer 2010 5 Mackinac Center IMPACT Service Taxes from Page One

LaFaive’s work was widely Public-sector average compensation we face, we cannot afford this reported and garnered 70 grows while private sector’s decreases generous subsidy.” media interview requests And you thought government budgets were cut to the bone Hohman and Adjunct through May, including Scholar Gary Wolfram analyzed a live national television Private-Sector Compensation claims made in a National in Michigan interview with Stuart Varney $57,192 Institute on Retirement Security on the Fox Business channel. $55,605 study titled “Out of Balance,” These efforts paid off. YEAR which purported to show that 2009 Five months after unveiling YEAR State and government employees are 2000 Local Government a tax “restructuring” plan Compensation in Michigan $52,748 underpaid compared to their that included the creation private-sector counterparts. $51,357 of a sales tax on services, Hohman explained that the Gov. Jennifer Granholm said at a July transfer payments have jumped from paper’s authors used a convoluted, press conference that she had given 11.2 percent of state personal income inappropriate method for arguing up on the Legislature adopting her to 18.8 percent. that government employees are proposal. While many factors may Hohman also pointed out that undercompensated. have contributed to the tax hike’s Michigan’s tax system is “juiced” Hohman’s work resulted in media demise, Hohman and LaFaive — at relative to other states. That is, as coverage throughout the state, including times lone voices — helped create an revenues have declined in state radio appearances on WJR with Frank informed environment where the plan treasuries across the country, the Great Beckmann, WKZO in Kalamazoo, was recognized as unnecessary and Lakes State generated more tax revenue WTCM in Traverse City, WJRW in destructive. per capita than 35 other states. Grand Rapids, WBCK in Battle Creek, Early on, LaFaive and Hohman Hohman also discovered and WKLA in Ludington and TalkLansing. were beset by speech, interview and published one of the more remarkable net. Hohman also published tax- and commentary requests from across the numbers employed by the Mackinac budget-related editorials in the Detroit state, thanks in part to Gov. Granholm’s Center in the last decade: $5.7 billion. Free Press and The Oakland Press. final State of the State address, fiscal In Michigan, that is the staggering While Hohman was busy smashing 2011 budget proposal and tax hike difference between the value of tax and spending myths, LaFaive was recommendations. But it was also nonsalary benefits, such as health focused on both broad and narrow due to Hohman carefully explaining insurance, paid to employees in state and topics of economic development, fallacies in arguments advanced by tax local government and public schools, detailing for legislators, university “restructuring” proponents. and the value of nonsalary benefits paid professors, students and the public For example, the state’s “Legislative to workers in the private sector. To put where Michigan has been and where it Commission on Government Efficiency” that figure in perspective, that amount of may continue to go economically. As argued that the state’s tax system was “no money could eliminate the state’s hated part of his research, LaFaive zeroed in longer appropriately linked with state’s business tax and related surcharge and on decade-long interstate migration resources/tax base.” The commission still leave $3.3 billion for balancing the patterns, demonstrating that since cited as evidence the fact that revenues budget and improving roads. 2000, Michigan lost more than 540,000 to the state Treasury have fallen far Not content with knocking down people while Texas added 848,000 — in short of the state’s Headlee Amendment the arguments of tax-and-spend part a function of differing state public that capped them at 9.49 percent of advocates, Hohman turned his policies. LaFaive’s Viewpoint on this personal income. But Hohman examined attention to employment numbers topic was carried on opinion pages in Michigan government revenues going for Michigan’s film industry. In his newspapers throughout Michigan. back to the late 1970s and found analysis, Hohman found — to the LaFaive also worked with that the state’s benchmark is a poor shock of many — that there are Communications Specialist Kathy measure for tax affordability, because fewer Michigan people working in Hoekstra for several months on an the revenues include transfer payments Michigan’s film industry than before investigation involving a possible (sometimes described as “welfare”). the state’s movie subsidy program Michigan Film Office deal for When these dollars are excluded, began. This finding generated headlines “Hangar42,” a Grand Rapids-based movie Hohman noted, the numbers show that across the state and prompted one studio project with such state secrecy that the state extracts $1 billion more from state senator to declare, “As a job Mackinac Center staff nicknamed the taxpayers than would be allowed under creator, film subsidies have failed in deal “Area 42” after the famed Area 51 the Headlee Amendment. Since 1978, Michigan … With the budget problems military base in Nevada.

Mackinac Center IMPACT 6 SummerSpring 2010 2010 www.mackinac.org www.mackinac.org Service Taxes from Page One

With a hard-hitting video and The analysis was done in conjunction characterization, however. “Our plan has accompanying essay, LaFaive and Hoekstra with the Beacon Hill Institute of been compared to Governor Granholm’s publicly raised questions about the deal’s Massachusetts and found that the first- tax reform plan,” the letter read. “While finances and the lack of government year job losses would total more than some elements of the Governor’s plan may transparency. The Grand Rapids Press, 30,000, dropping to 13,500 by the end of have been influenced by ours, Business WOOD radio, WOOD-TV and WWMT- year three as supposed offsetting tax cuts Leaders for Michigan’s business tax reform TV all used the Mackinac Center’s work were phased in. The model also showed plan is not the same as the Governor’s.” as a springboard for their own coverage. that the tax proposal would produce a In the end, it did not matter. Facing an (Look for more developments on this story $264 million drop in total investment in array of influential tax hike proponents, in the next issue of IMPACT.) the state in the first year. Hohman and LaFaive effectively exposed Continuing the factual When Michigan Capitol Confidential every erroneous argument and dissected bombardment against policies that reporter Tom Gantert contacted Liz Boyd, every example of specious scholarship would create higher taxes for Michigan spokeswoman for Gov. Granholm, about that claimed the state needed more residents and businesses, LaFaive the findings, she was dismissive. “The revenues. With the apparent death on June 15 released the results of an governor’s tax restructuring proposal was of the governor’s tax-hike proposal, analysis performed to measure the actually based on recommendations from both are determined to restructure an impact of Gov. Granholm’s February the Business Leaders for Michigan,” she antiquated tax debate that has focused tax hike proposal. The governor’s plan wrote in an e-mail. too often on Michigan taxpayers’ leaving would total some $940 million over A letter to Gantert from the Business more money for state government three years. Leaders for Michigan disputed that — not the other way around. I Media Impact: Radio Free Michigan

There is hardly a Michigan media outlet that hasn't carried the Mackinac Center's message at some point. But on the morning of May 6, Center analysts were made available to almost every one of Michigan’s 10 million residents, as long as they had a good radio. Patrick J. Wright, director of the Mackinac Center Legal Foundation, was on “The Frank Beckmann Show” on WJR AM760, explaining the MCLF lawsuit that is attempting to overturn the forced unionization of tens of thousands of small-business owners and independent contractors statewide. The same interview was also WMKT 1270 AM Charlevoix, MI broadcast on Grand Rapids-based WJRW. At the same time, Russ Harding, senior environmental analyst and director of the Center's Property Rights Network, was on “The Greg Marshall Show” on WMKT in Traverse City, reviewing Michigan’s hostile regulatory regime. Also that morning, Michael Jahr, senior communications director, and James Hohman, fiscal policy analyst, were live guests on the “Renk and File” show on WBCK in Battle Creek, discussing Michigan’s budget and why Gov. Jennifer Granholm’s tax-hike plan — which she has since abandoned ­— would be detrimental to Michigan. As a bonus, May 6 also saw Senior Economist David Littmann quoted in The Oakland Press in a story about the stock market, and Jack McHugh, senior legislative analyst, cited in a Detroit News editorial WJRW 1340 AM about the Michigan Legislature’s self-created overspending crisis. Grand Rapids, MI Those papers have circulations of 70,000 and 180,000, respectively. I WBCK 95.3 FM Battle Creek, MI WJR 760 AM Detroit, MI www.mackinac.org Summer 2010 7 Mackinac Center IMPACT Advancement Impact An Encouraging Word ­— or 215!

ow often do you receive a the Mackinac Center. One thing is sure: These folks care about compliment or a personal note of This strengthens us freedom, liberty, limited government and encouragementH in the mail? In today’s as an organization by the future of our state. busy world, it is rare indeed when significantly diversifying I shared a handful of these quotes people take the time to share a kind and our funding base while at a recent Mackinac Center staff uplifting word. Well, please keep reading, also increasing the meeting. (No names were used, in

as I share with you just some of the Darryl M. White, number of people who keeping with our confidentiality encouraging words that we have received Vice President for embrace the important practices inside and outside the this year. Our contributors truly are a Advancement principles that we work Center.) My colleagues greatly class act. for every day at the Center. appreciated hearing from you, since Since its inception in 1987, the We have been greatly encouraged this is why we do the work we do: Mackinac Center for Public Policy has by this enhanced level of support and to make Michigan a better place for operated through generous, voluntary look forward to joining together with us all, particularly in honor of your contributions from individuals, hundreds, if not thousands, more support for our fight for freedom. businesses and foundations who embrace Michigan residents in the year ahead, 12 free markets, personal liberty for all as the Mackinac Center staff works After you read these comments, individuals, limited government and diligently to provide winning ideas to please let me know what you think. Send personal property rights. turn around this state. me an e-mail at [email protected]; During our 23-year history, we have We hope you will enjoy reading this call me at 989-631-0900; or write me never accepted, nor will we ever accept, cross-section of unsolicited comments a note and send it to Darryl White, government funding for the work we do. received from our friends across Michigan Mackinac Center for Public Policy, In the past five years, we have since Jan. 1. Most of these words arrived 140 West Main Street, P.O. Box 568, seen more and more individuals step on a sticky note, a scrap piece of paper or Midland, MI 48640. up and provide financial support to on the memo line of a contributor’s check. I look forward to hearing from you! I

“Thanks for speaking on behalf of property “Keep up the good work and keep us informed.” owners. … I’m glad to hear somebody Baraga, $10 speaking for sanity. Kudos.” McMillan

“Thank you for all you do to help us plebians monitor the patricians in Lansing.” “I hope other states have a group like yours. “Thank you for what you do – Hoxeyville, $10 I wish we could give a million dollars.” you are hope and action!” Pinconning, $100 Maple City, $25

“Thank you for sending me a copy of Michigan Capitol Confidential. … “Keep up the good work. You give me hope for our good state.” It is very useful in finding out what is going on in Lansing.” Traverse City, $50 Cedar Springs, $20

“We believe in what you stand for.” “Best of luck on the appeal “My best to you all. Please keep up your important work.” Bloomfield Township, $5 on the union child caregiver Grand Rapids, $15 case. ... Keep on going!" Midland, $150 “Keep the faith in democracy and free enterprise.” “I would like to send more. ... I want to help.” Grand Rapids, $250 Hemlock, $10

“Keep spreading the truth.” Ionia, $2 “You folks are performing a splendid job and direly needed.” Pontiac, $20

“Retired and broke!! But I love [Michigan “I appreciate the Center’s work.” Capitol Confidential]." “We are retired, but love our liberty.” Warren, $100 Caledonia, $40 Temperance, $20 “You are doing a great job — wish I could send more; you think right.” To Joe Lehman: “Your [New Year’s] resolutions are on my refrigerator door.” Farmington, $25 Plainwell, $300

Mackinac Center IMPACT 8 Summer 2010 www.mackinac.org Day Care Lawsuit Allies: And Then There Were Many

or an arrangement born in subterfuge, the forced unionization of Michigan’s day care providers is certainlyF in the spotlight, thanks to Patrick Wright, director of the Mackinac Center Legal Foundation, and the Mackinac Center communications staff. The Center’s battle against the unconstitutional arrangement is gaining allies in the courtroom — and in the court of public opinion. The campaign against the arrangement began last year when Wright filed suit against the state Department of Human Services on behalf of three day care providers, demanding that the department cease withholding Mackinac Center Legal Foundation clients Sherry Loar, Paulette Silverson so-called “union dues” from state subsidies paid to the and Michelle Berry stand firm at the Michigan Supreme Court. women and to other independent day care contractors — including thousands of small-business owners — for Detroit Free Press published a lengthy, front-page, above- providing day care services to low-income parents. The the-fold article on MCLF client Michelle Berry. Shortly DHS, Wright observed, could not declare private-sector after, Frank Beckmann of WJR AM 760 interviewed day care contractors “public employees” subject to “union MCLF client Sherry Loar on his show and subsequently dues” without an act of the Michigan Legislature. After wrote about the case in his April 9 Detroit News column, being rebuffed by the Michigan Court of Appeals, Wright decrying “the incestuous relationship between the appealed to the state Supreme Court. Granholm administration and labor unions in Michigan.” In April, two additional groups filed “friend of the The Macomb Daily and Oakland Press also editorialized court” briefs on behalf of the Mackinac Center’s clients: against the forced unionization, while The Detroit News the 350,000-member National Federation of Independent weighed in with an editorial about legislative solutions. Business and the nonprofit American Civil Rights Union. Wright testified about those remedies before a Senate The NFIB emphasized that unionization of day care committee and subcommittee on three Senate bills that providers would mean “that any private sector business would end the unionization of day care providers (there that accepts subsidies from the State could be similarly are similar bills in the Michigan House). He also discussed forced into a public sector union.” The ACRU agreed, the possibility of defunding the ersatz “employer” of the writing, “This [unionization] is just the beginning of the day care providers, the Michigan Home Based Child Care possible mischief.” Council, a shell corporation cobbled together largely to On May 12, about a month later, the Department of give the union someone to “bargain” with. Human Services responded to the MCLF’s suit with an The child care council’s thin façade was exposed by evasive defense that Wright later described as “a thin Center Communications Specialist Kathy Hoekstra. Using hodge podge of technicalities.” Indeed, although the DHS the Freedom of Information Act, Hoekstra unearthed a was permitted 50 pages to make its case to the court, it lengthy e-mail exchange in which a union official stated filed just 12, and it never tried to show that the day care that the council — a titular “employer” — was created “at providers really are public employees. the recommendation of Michigan AFSCME and the UAW Instead, the department lamely contended that the with the support of the [governor’s] Executive Office.” Center’s clients should have challenged the union’s The official also slipped by describing day care providers certification with the Michigan Employment Relations as “independent contractors” rather than government Commission, which oversees labor relations with public employees, and he admitted, “This [unionization] is an employees. This logic was circular, and Wright drily noted in experiment with little guidance from the statute and his written response to the court that as private contractors, virtually no administrative or judicial precedent to follow.” his clients “had [no more] obligation to resort to that forum Hoekstra published the e-mail in a video she produced than they would have had if the issue had been brought as part of an ongoing series on the case, and a similar story before a Superior Court Judge in Nome, Alaska.” appeared in the Mackinac Center’s online publication, A Michigan Supreme Court decision could come as Michigan Capitol Confidential, on May 3. early as the end of July. In the meantime, media interest When this lawsuit began 10 months ago, the Center in the case remains high. On March 31, the Lansing State was the only organization objecting to the forced Journal editorialized against the day care unionization, unionization of Michigan’s independent day care observing that if the indirect receipt of state subsidies contractors. But due to the hard work of Wright, Hoekstra was sufficient to convert private businesses into public and the entire Center staff, momentum is growing against employees, homeowners who receive a property tax this tragedy of politics and bureaucracy — and the exemption could be unionized as well. On April 20, the Center’s clients are no longer alone. I

www.mackinac.org Summer 2010 9 Mackinac Center IMPACT Free-Market Fundamentals

Our Economics Knowledge Deficit By Lawrence W. Reed

conomics dominates public life market competition and private property they flout inexorable laws of human and important policy discussions in a suspicious light while presenting action. It reminds us to think of the long- theseE days, but most people who rely government intervention with little or no term effects of what we do, not just the on what they’ve learned of it in the critical scrutiny. short-term or the flash-in-the-pan effects. schools are entering the intellectual Economics is immensely important. When people have little or no battle unarmed. Without it we miss an understanding economic understanding, they embrace Economics courses in high school of much of what makes us the unique, impractical “pie-in-the-sky” solutions to are few and far between and often thinking creatures that we are. Economics problems. They may think that whatever deal with little more than “consumer” is the study of human action in a world the government gives must really be issues: how to balance a checkbook, of limited resources and unlimited wants “free,” and that all it has to do to foster how to find the best deals in the — a lively topic that cannot be reduced prosperity is to command it. market, or how to borrow money at to lifeless graphs and mind-numbing Citizens are being asked every the lowest interest rate. Those are all equations that occupy the pretentious day to form judgments and cast votes useful things to know, but the mental planners’ time. for programs and proposals that are tools and essential principles needed Economics teaches us that everything largely economic in nature. We should to analyze and evaluate the paramount of value has a cost. It informs us that think about how we can provide the issues of the day are too often missing. higher standards of living can only come missing tools we need to make those Even a cursory examination about through greater production. It and other such decisions, so that we of textbooks used in high school tells us that nations become wealthy not don’t dig ourselves deeper in the muck economics courses reveals a dismal by printing money or spending it, but of poor thinking and bad public policy. level of understanding or outright bias through capital accumulation and the I’m thankful that the Mackinac Center by the authors themselves. Students creation of goods and services. It tells us helps fill the void created by the dearth are sometimes reading that citizens are that supply and demand are harmonized of sound economics in primary and under-taxed, that government spending by the signals we call prices and that secondary education. I creates new wealth and that politicians political attempts to manipulate them Lawrence W. Reed is president emeritus of are better long-term planners than produce harmful consequences. the Mackinac Center for Public Policy and private entrepreneurs are. It is not Economics explains that good president of the Foundation for Economic uncommon for texts to portray free- intentions are worse than worthless when Education (www.fee.org).

Mackinac Center IMPACT 10 Summer 2010 www.mackinac.org Free-Market Library

VIEWPOINTS How Michigan’s Foundation VIDEO Allowance Works Constitutional Convention Golden Ticket June 2010 V2010-16 Won’t Fix Michigan’s Problems Many charter public schools are forced Laws governing how Michigan funds April 2010 V2010-10 to hold “lotteries” because there are more public schools can be complex. This In November, Michigan voters will students than seats available. This video commentary explains the foundation decide whether to call a constitutional documents the lottery held in March at allowance and corrects some common convention. There is no guarantee that South Arbor Academy. Due to an arbitrary myths surrounding the term. a convention would fix problems now www.mackinac.org/12942 cap on the number of charter schools in plaguing our state, and revising the Michigan, some 12,000 students are on document could make things worse. Michigan Taxpayers Have waiting lists. www.mackinac.org/12509 Already Made Compromises www.mackinac.org/12432 Taxpayers Never Get Early Retirement June 2010 V2010-17 Proposed changes to public employee April 2010 V2010-11 benefit plans will not correct a system that Policymakers don’t seem to have a problem has grown too expensive in past years — with across-the-board tax increases that and will increase in cost in future years — impact nearly all Michiganders, but they to offset the tax hikes that legislators desire. don’t apply the same fervor to keeping their www.mackinac.org/12943 spending in line. www.mackinac.org/12510 More and More a Political Animal Film Noir June 2010 V2010-18 Online Learning Can An investigation by Fiscal Policy A review of reports filed by the nation’s Improve Michigan Director Michael LaFaive and largest unions reveals two things: Public Education Communications Specialist Kathy Public-sector unions are growing while April 2010 V2010-12 Hoekstra uncovered several unanswered private-sector unions are shrinking; Online schools questions surrounding a multimillion and politics, not collective bargaining, can increase dollar investment in a Grand Rapids- dominates unions’ focus. student achievement and are less expensive www.mackinac.org/12945 area movie studio that had been listed by to operate than conventional schools. a real estate agent for a fraction of that www.mackinac.org/12511 amount just months ago. The studio has JOURNALS Michigan Service Tax Defended applied for a large refundable tax credit by Phantom Facts MichiganScience through the Michigan Film Office. www.mackinac.org/12804 May 2010 V2010-13 MS2010-02 Gov. Jennifer Granholm and the Key stories: Cancer research, risk Knockout Punch Legislature should not pursue expanding assessment, state of the Great Lakes. Education Policy Director Michael www.mackinac.org/12420 Michigan’s sales tax to services as a way Van Beek and Communications of correcting their overspending crisis. MichiganScience Specialist Kathy Hoekstra apply a www.mackinac.org/12665 MS2010-03 “truth-o-meter” to Michigan Education The Paying Class vs. Key stories: Risk assessment, engineering Association ads that claim teachers the Government Class in high schools, nuclear power plants. are treated like “punching bags” by the Michigan Legislature. The video May 2010 V2010-14 www.mackinac.org/12911 explores claims that school employee The salaries and benefits of Michigan’s concessions have saved taxpayers $1 government class — including politicians STUDIES billion in recent years, that class sizes are — need to be brought back in line with increasing and that teachers spend an that of the private-sector workers who are Chetly Zarko v. Howell Education Association average of $500 annually out-of-pocket paying the bills. www.mackinac.org/12666 S2009-11 on classroom supplies. The Mackinac Center Legal Foundation www.mackinac.org/12928 Michigan’s Gift to Texas? People and the Michigan Press Association filed May 2010 V2010-15 a joint “friend of the court” brief before Special Projects Calls for higher taxes in the Michigan Supreme Court in a case Civil Society Michigan — on top of involving a citizen political activist’s SP2010-01 the state’s fettered request for e-mails created on a public President Joseph G. Lehman's essay, economy — will send school computer server. A faulty decision originally published in The Heritage more Michigan residents would seriously damage the state’s Foundation’s October 2009 booklet packing. Many of them, Freedom of Information Act and the “Indivisible: Social and Economic statistics show, will end public’s ability to monitor the actions of Foundations of American Liberty,” was up in Texas. elected officials. www.mackinac.org/12667 www.mackinac.org/10443 reissued as a Mackinac Center pamphlet.

www.mackinac.org Summer 2010 11 Mackinac Center IMPACT 140 West Main Street, P.O. Box 568 Midland, Michigan 48640

Defending FOIA: The Center, the Media and the Message

hen the Mackinac Center The trial court granted the FOIA who may have every reason to bury opened more than 22 years request, but was overruled by the inappropriate or illegal activity by Wago, it faced an uphill battle to gain Court of Appeals, which took a narrow their subordinates. attention from the media. Now, view of the term “public record” and In a press release announcing the the Center and the Michigan Press declared the e-mails in question to be joint brief, Luce Hermann stated, “The Association have teamed up to try “personal,” even though they pertained outcome of this case is of vital interest to undo the damage inflicted on the to collective bargaining between to every newspaper in the state of Michigan Freedom of Information the teachers union and the district, Michigan because it will impact Act by an erroneous state Court of obviously involving the expenditure of their ability to engage in reporting Appeals decision. public money. and inform citizens on the workings On May 11, the Center and the In the joint legal brief, Mackinac of government, including misuse of MPA filed a joint “friend of the court” Center Legal Foundation Director taxpayer money.” brief with the Michigan Supreme Patrick Wright and MPA General Wright later penned an Op-Ed Court, asking it to reverse a judgment Counsel Robin Luce Hermann on the case that appeared in the May that could shield criminal and noted that Michigan’s FOIA was 28 Detroit Free Press. He was also improper government actions from passed soon after Watergate and interviewed on “The Frank Beckmann scrutiny. The case arose from a citizen- was intended to allow citizens to Show” on WJR 760 AM in Detroit journalist’s attempt to determine police the activity of government and WSJM out of St. Joseph. The whether teachers in the Howell Public officials, since the public did not trust Livingston County Press & Argus Schools were illegally using the school those officials to do so themselves. reported on the filing of the brief. district’s e-mail system to conduct Unfortunately, the Court of Appeals’ The Michigan Supreme Court union business during a heated ruling would undermine the law’s is expected to act on the case by collective bargaining process. Using intent by essentially leaving the September or October. As the case the Freedom of Information Act, he decision concerning which e-mails proceeds, the Center will help the sought e-mails from the various union were “personal” and which were media defend a freedom of information officials who taught at the school. “public” to government supervisors, meant to benefit everyone.I

www.MichCapCon.com Mackinac Center IMPACT 12 Summer 2010 www.mackinac.org Mackinac Center Quick Reference Mackinac Center Quick Reference

You don't have to be a school professional to have access to It's easier than ever to some of the Center's most-used stay connected with research areas. the Mackinac Center! Much of the day-to-day life of Michigan’s public schools is shaped by districts' By using new social union contracts, spending choices and networking tools, not only available revenues. Michigan School are you able to tailor-design Databases, hosted by the Mackinac the information you want to Center, provides a revealing look at Michigan’s public school districts. receive, but you're also able District Collective to link up with other freedom Bargaining Agreements lovers from Michigan and This database contains PDF copies of each Michigan district’s collective bargaining agreements across the nation. for teachers, bus drivers, aides, office staff and other employees. Union contracts spell out not just Use this reference guide to get salaries and benefits, but also information about class size, employee evaluations, school calendars, started. and more. Also available: District-specific contract summaries and analysis.

District Health Insurance Information E-mail signup: www.eepurl.com/ktqq This database contains information about 2008-2009 www.mackinac.org district-provided employee health insurance. Users can find the insurance providers, plan types and titles, number and type of employees enrolled, monthly premium costs and the amount employees contribute www.facebook.com/MackinacCenter to the premium for nearly every district in the state.

District Revenue and Expenditure Report These data are taken from the National Public www.twitter.com/MackinacCenter Education Finance Survey and show major categories of revenue and expenditure for each public school district for fiscal 2004 through fiscal 2008. The figures appear as both dollar amounts per www.mackinac.org/MCPPrss category and dollar amounts per pupil. Each district is compared to the state average.

District Checkbook Register Report Part of the Mackinac Center’s ongoing government www.MichiganCapitolConfidential.com transparency project “Show Michigan the Money,” www.facebook.com/MichCapCon this database links users to the checkbook registers www.twitter.com/micapcon of the school districts that publish such data online. www.MichCapCon.com/MCCrss Users can track districts’ expenditures check by check at these sites. More districts are expected to publish their registers online in the months to come. Michigan Education Digest

District Categorical Grant Report E-mail signup: www.eepurl.com/I1U7 In addition to per-pupil revenues, Michigan school www.EducationReport.org districts receive grant money for specific purposes www.EducationReport.org/ERrss independent of total student enrollment. The categorical grants database lists the amount each THE district received in fiscal 2007 in categories as Overton Window diverse as “at-risk students,” “math readiness” and “bilingual education.” The database permits district- Email signup: www.eepurl.com/Bhkz to-district comparisons. www.TheOvertonWindow.com www.facebook.com/OvertonWindow

Find it at mackinac.org/10361 www.mackinac.org Summer 2010 13 Mackinac Center IMPACT