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Republicans have spent most of the 2022 cycle hurling attacks on the economy and inflation under Democrats Gov. Gretchen Whitmer and President Joe Biden — which many political analysts have said should help the party make gains during the midterms.
“The Whitmer administration top-to-bottom is infected with a culture of progressive, anti-business political activism. It’s stifling growth and destroying our state’s economic future by sending the wrong message to job-creators and businesses, in effect telling them that we don’t want them here,” GOP gubernatorial nominee Tudor Dixon said last week during her “Open for Business” tour.
After the GOP-led Legislature in May approved the Republicans’ $2.5 billion tax cut plan in May, Senate Majority Leader Mike Shirkey (R-Clarklake) blamed Whitmer and Biden for inflation.
“The increasing costs of everyday necessities affects all of us, stretching family budgets thinner and thinner — especially for the working class and those less fortunate — while state government revenues soar higher and higher. These are the unfortunate, if not predictable and avoidable, consequences of the economic policies that have been pushed by President Biden and Gov. Whitmer over the past two years,” Shirkey said.
Whitmer vetoed the legislation, calling the sweeping changes to the tax code constitutionally “invalid and unenforceable.”
Whitmer instead proposed targeted tax relief, eliminating the tax on pension income, which she says will save a half-million seniors an average of $1,000 per year, and increasing the Earned Income Tax Credit (EITC) for working-class Michiganders from 6 to 20% of the federal credit, which she contends will “put nearly $3,000 in the pockets of 730,000 working families.”
While the GOP plan would have lowered the state’s personal income tax rate from 4.25% to 4%, Dixon has promised an even bigger tax cut if she’s elected. The Republican wants to phase out the personal income tax until it’s eliminated, modeling states like Texas.
The personal income tax brought in $14.5 billion during Fiscal Year 2021, per the Michigan Department of Treasury in May and is one of the biggest sources of state tax revenue.
In recent weeks, Whitmer has gone on offense on economic issues, touting the success of Biden’s Inflation Reduction Act (IRA), his student debt reduction plan and economic rebounds after the pandemic. That comes even as some Republicans have suggested Whitmer, who’s running for reelection against former right-wing commentator Tudor Dixon, would distance herself from an unpopular president.
However, Biden’s poll numbers have been rising since he signed the $750 billion IRA in August, while Whitmer has held steady leads against Dixon.
The bill lowers health care costs and energy costs, creates new jobs, cuts the nation’s deficit by $300 billion, ensures billion-dollar-companies pay a minimum of 15% tax and invests in communities’ infrastructure and natural resources. It is estimated to create 1.4 to 1.5 million jobs nationwide by 2030.
“The Inflation Reduction Act will create and protect millions of good-paying manufacturing jobs across the nation, and I am taking action today to ensure that Michigan is ready to fully harness its benefits,” Whitmer said in a statement this month. “Together, we can create and protect hundreds of thousands of good-paying jobs here in Michigan, building and retooling factories, surging clean energy production and doing what we do best — putting the world on wheels. The IRA’s job-creating investments will build on our momentum, keeping unemployment low and economic growth high.”
Whitmer signed a number of executive directives earlier this month that go tandem with the passage of the IRA.
The executive directives are aimed at lowering costs of prescription drugs in Michigan, using available resources from the IRA to create jobs in Michigan and mobilizing state departments to assist businesses in reducing energy and supply chain costs by helping companies reduce emissions, retrofit facilities and use clean energy to power operations.
Dixon has made her opposition to the IRA clear.
Before the IRA made its way through Congress, Dixon called on Whitmer to join her in asking U.S. Sens. Debbie Stabenow (D-Lansing) and Gary Peters (D-Bloomfield Twp.) to “vote NO on the misleadingly named Inflation Reduction Act as it will raise taxes on all Michiganders which is the last thing they can afford right now.”
Biden also released last month his long-awaited student debt plan. It forgives up to $10,000 in student loan debt for borrowers who earn less than $125,000 and married couples earning less than $250,000, and up to $20,000 for Pell Grant recipients, will not be treated as taxable income in Michigan.
Whitmer also has touted this as a success for the nearly 1.4 million Michiganders who have federal student loans.
“People can use these savings to buy a home, start a business, get married or start a family,” she said in a statement.
But Republicans in Michigan and across the country have been strongly critical of Biden’s move.
Appearing on “Fox and Friends” on Aug. 25, Dixon panned the plan as “the tax they said they weren’t going to raise on people. It’s all the people [that] said, ‘I don’t want to take a loan’ or paid off their student loans and they’re now on the hook for other people’s loan [sic].”
Dixon also dismissed Biden as playing politics.
“And let me look at my watch,” she said. “It looks like midterms are coming up. I think it might just be another way to buy votes.”
Before some signs of an economic bounceback over the summer, Democrats were on defense over high inflation rates.
The U.S. inflation rate is still estimated around 8.3% in August, but has been dropping. This year, it reached the highest level in June, with prices increasing 13.3% from January 2021 to June 2022, according to the U.S. Joint Economic Committee. In June, when the report was released, Michigan had the second highest monthly inflation costs, which grew by $103 — only behind Illinois ($115).
After months of high gas prices, drivers have gotten some relief at the pump. In June, the highest price recorded was $5.02 per gallon. The average national price per gallon is now $3.75, per AAA, which is still up from last year’s average of $3.19 per gallon. There are concerns about prices rising again with Hurricane Ian set to hit Florida. Gas averages $4.12 per gallon in Michigan, with a recent uptick due to a refinery fire in Indiana. That’s up from last year’s average of $3.24.
Whitmer attributes some of the falling gas prices to an executive order she signed last month that lifted limits on hours drivers can drive if they are carrying gas and diesel and allowed the state to begin the transition to the fall fuel supply.
But Republicans are still on the attack, saying Democrats should have rolled back the gas tax.
“Failed policies from the Biden Administration continue to hurt the economy in Michigan and now gas prices are back on the rise,” Republican State Leadership Committee spokesperson Mason Di Palma said on Tuesday.
Other economic indicators have been more positive. The Department of Treasury reported at the May Consensus Revenue Estimating Conference that Michigan wages and salaries rose 9% in 2021 and are forecast to rise 9.8% in 2022. Personal income rose 5.2% in 2021 in Michigan and is forecast to increase 2.7% in 2022.
The national unemployment rate is low at 3.7% for August. Michigan’s preliminary unemployment rate for August is slightly higher at 4.2%. That number has been decreasing since April 2020, at the start of the pandemic.
Ken Kollman, the director of the Center for Political Studies at the Institute for Social Research and a professor of political science at the University of Michigan, said it’s not surprising that Democrats, like Whitmer, are reshaping their campaigns around the momentum of the improving economy.
“They will adapt to the moment, and especially if they are getting some traction by touting their recent policies on student loan forgiveness or the recent reduction in gas prices that are happening nationwide,” Kollman said. “The Democrats are, of course, given that the governor and the president are incumbents, going to tout any economic successes they can.”
In May, the Detroit Regional Chamber released findings from a statewide poll of registered Michigan voters that showed Michiganders’ top concerns then were inflation and economy. Nearly 73% of respondents said the economy was on the wrong track due to inflation.
The Democrats are, of course, given that the governor and the president are incumbents, going to tout any economic successes they can.
– Ken Kollman, the director of the Center for Political Studies at the Institute for Social Research and a professor of political science at the University of Michigan
An August poll from the left-leaning, San Francisco-based firm Data for Progress (DFP) and Evergreen Collaborative, a left-of-center policy advocacy group founded by former staffers of Washington Gov. Jay Inslee’s 2020 presidential campaign, shows 64% of Michigan voters support the IRA. That includes 87% of Democrats, 65% of independents and 42% of Republicans in the state.
An EPIC-MRA poll surveyed Michiganders this month and found that abortion and inflation tied as voters’ top issue ahead of the election, with 24% of those surveyed listing each as their No. 1 priority.
Kollman said focusing on the economy might help Democrats swing voters, rather than focusing on some of the more hot-button cultural issues like school curriculums and LGBTQ+ issues.
“[Democrats] are going to try to avoid these issues because they’re not winning among the people they need to swing in these last few months,” Kollman said.
He said that Democrats biting back on the economy could hinder efforts from Republicans who are campaigning on the recession during the pandemic, businesses shutting their doors and companies moving out of state the last few years.
“Whether it will succeed or not, it is certainly an attempt to blunt some of those criticisms,” Kollman said.
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