EXCLUSIVE Interview: Former Governor Jennifer Granholm Talks About the Political and Economic Past & Future of Michigan and the U.S.

by Chris Savage

Last week, former Michigan Governor Jennifer Granholm and her husband Dan Mulhern released their new book A Governor’s Story – The Fight for Jobs and America’s Economic Future. (You can read my A2Politico review of their book HERE.) Since then, they have been on a whirlwind national tour, conducting newspaper & magazine interviews, talking on radio shows, and appearing on television news programs and morning shows every day. Governor Granholm even took time to do an interview with John Stewart on The Daily Show.

Tuesday night the two of them came to Ann Arbor for their first appearance in Michigan on their national book tour. Their appearance, in conjunction with Nicola’s Books, also served as a fundraiser for Ann Arbor’s historic Michigan Theater. The stage was simple: two bar stools and a table with water bottles and their book. They spoke for roughly thirty minutes, as much a conversation with the audience as anything, and then answered questions from their Facebook page and from the audience.

The clear message Granholm and Mulhern are trying to convey to the country is that the old ways of doing things no longer work. We live in a time when a laissez-faire approach to our economy no longer works. While our states are fighting over a small number of new manufacturing plants being built in America, other countries around the world are using the power of an economic program/strategy at the national government level to lure new manufacturing and jobs. In other words, our country’s “hands-off” approach is providing a prime opportunity for countries around the world to leapfrog us and take the lead in the creation of new jobs.

Mulhern and Granholm repeatedly say that what happens in Michigan is a template for what will happen to America. “When you read the morning papers these days and see what’s happening,” Granholm asked the audience Tuesday night, “Don’t you feel like it’s déjà vu all over again?” According to them, because Michigan tends to be a bellwether for the country, we should pay close attention to what worked and didn’t work here and apply that at the national level.

One of the most poignant moments of the evening came when a nine-year old boy named Vincent approached the microphone with a question he had written on a small slip of paper. “Governor Granholm,” he asked. “Before you became governor, did you have a vision and did it change after you were in office?”

Granholm then told a story that is recounted in her book of a mid-40s father with several children who came to her at the “Last Supper” picnic after the closing of the Electrolux plant in Greenville early in her first term. The man who approached had worked in the plant his entire life as had his father before him. “All I know is how to make refrigerators. Who is going to hire me?” he asked her. Prior to the closing of the factory, when the Granholm administration was informed that Electrolux was moving their operation out of the country, she and her team assembled a package of tax incentives, labor concessions and government assistance unlike anything ever seen in this state. After being presented with the proposal, the Electrolux team spent all of 17 minutes considering it before telling her and her staff, “It’s a valiant effort, one of the best incentive offers we’ve ever received. But we’ve got to cut costs, and we can pay $1.57 an hour in Juarez. There’s nothing you can do to make up for that. Given all they had done to save the Greenville man’s job and then to be told there was nothing they could do was a bombshell for Granholm.

“That day,” she told nine-year old Vincent, “That day my vision changed.” She realized then that everything had changed. The old ways of doing business were no longer relevant. From that point on, her administration focused almost single-mindedly on diversifying Michigan’s economy and focusing on educating and retraining workers so that they could use the competitive edge of innovation and smarts to compete in the global arena.

I caught up with Governor Granholm by phone from her California home last weekend and talked to her about her book, her future and what she and her husband are hoping to accomplish with A Governor’s Story.

A2Politico: Thank you so much for agreeing to this interview. Let’s start out by asking what you’ve been up to since leaving office (other than writing a book, of course!)

Governor Granholm: I have been teaching at the University of California, Berkeley – a two-year joint appointment between the Law School and the School of Public Policy. We have moved out here with our son, Jack, who started high school this fall. This year I’m teaching a graduate course entitled, “Governing During Tough Times” and a course on clean energy policy. Both are things I like to think I know a little something about! I’m also working with the Pew Charitable Trusts to co-lead a campaign for national clean energy policy. Dan and I are happy to finally spend some time with my parents, who are very relieved to have me nearby after a 27-year absence from California.

A2P: What are your plans for the future? Are you planning to remain in Michigan? Will you run for office again?

Granholm: Well, I will certainly stay in the public sector, and I consider being at a university to be in the public sector. It’s important to me to serve society in this way. But I won’t run for office again. I think 12 years is enough! As for Michigan, it will always be home; our daughters are there, Dan’s family is there, and we’re still in the market for cottage property.

A2P: As you look back on your time as the governor of Michigan, what are you most proud of?

Granholm: I am most proud of laying the foundation for a more diverse economy, adding new sectors such as the battery for the electric vehicle, reforming our education standards so that every child in the state now takes a college prep curriculum, giving 150,000 displaced workers the dignity of a second chance through No Worker Left Behind.

A2P: What is your biggest regret? If you had it to do over again, what would you do differently?

Granholm: Well, I don’t really like looking in the rearview mirror, but I would have done everything sooner, particularly investing in new sectors and No Worker Left Behind. But in order to get the money to achieve that, I needed a cooperative federal government to provide the resources and partnership, and that didn’t happen until 2009 [when the Obama administration came in] so it would have been very hard.

A2P: A recurring theme in your book A Governor’s Story is that most people in Michigan didn’t realize how bad things were, how much your administration had done to cut taxes and stave off economic collapse, and how much you accomplished to lower the footprint of state government. A commenter on my review of your book, someone who is obviously a liberal, said, “Granholm did very little for Michigan while Governor.” Given how hard you did work and how much you did accomplish despite the odds against you, how do you explain this? Do you feel like you didn’t effectively communicate your message and actions to Michigan voters, including those who should have been your political allies?

Granholm: Well, first of all, I hope you encouraged your commenter to read my book! But, really, this is the perpetual problem for people in leadership during a crisis: people who are struggling – Democrats and Republicans — will always be disappointed that circumstances are not better, and naturally they will blame the person in charge, who probably campaigned on fixing things, for the status quo. We could not physically have worked harder. We had the right prescriptions: diversify the economy, add new sectors, invite international companies to create jobs for Michigan citizens, reform our education system top to bottom. We tried the old prescriptions, and they didn’t work. You can ask my communications team – we were out there communicating every day. But the reality on the ground of high unemployment and the bad news with manufacturing and the auto industry swamped the daily press conferences or radio interviews on successes that we were achieving. We had a plan and were working that plan every day, but what people feel is that jobs have gone and their company is bankrupt and they have a layoff notice. And I think sometimes people don’t want to fully believe the good news we get because they don’t want to get hurt again.

A2P: There’s a distinct difference between the approach you took as governor and the approach being taken by Rick Snyder. Your approach focused, in part, on targeted tax incentive packages to specific industries. Governor Snyder’s approach is to lower taxes for businesses in general and let the market sort out the “winners and losers” rather than the state government. Why do you feel your approach is the right one for our state? Do you feel “picking winners and losers”, as some call it, is appropriate at the federal level as well?

Granholm: I’m not going to comment on Governor Snyder, so allow me to answer more broadly. States and the federal government would be missing a huge opportunity if they did not engage in smart, strategic economic planning. But in reality every state does it – states headed by Republicans and states headed by Democrats. Mitt Romney did it in Massachusetts in focusing on biosciences as much as Rick Perry did it in Texas focusing on telecom and energy. But the problem is states are simply waging war on each another, moving businesses around the country to the highest bidder. That’s a foolish national economic development strategy. And, let’s face it, no state has the tools to compete with China. America needs to identify and build on our strengths and invest in the breakthrough research, innovation and technologies that will lead to products made right here in America, and we need to partner with the federal government to do it to win those jobs from China, India or any other economic competitor. It’s a global war for jobs, and the federal government has brought a knife to a gunfight.

A2P: You say in your book that you cut business taxes 99 different times and taxes on individual 17 times. Despite this, our economy still tanked and our state had the highest level of unemployment in the country for a time. You make the case that tax breaks, particularly in a time of economic crisis, aren’t the solution to the problem. Looking back, would you still have cut taxes as much as you did?

Granholm: I think every government can improve efficiency, and it’s important to do that. I like a lean-but-not-mean government. I also like a government that smartly invests in job creation. My point is that tax cuts and small government alone did not cause our economy to improve; it was investment and government intervention in the auto industry that caused our unemployment rate to drop 6 times faster than the national average in 2010. Active government, not laissez faire passivity, was necessary.

A2P: There is currently a push to eliminate the personal property tax in Michigan as a way of encouraging owners to make capital investments businesses. However, revenues from this tax make up over half the revenues for some municipalities. Do you agree that this is a job-killing tax and, if so, how you eliminate it without harming local municipalities that are already struggling with overwhelming budget deficits as federal cuts to states translate into state cuts for local governments?

Granholm: The personal property tax (PPT) disproportionately negatively impacts manufacturers who lost the benefit of the tax credits they received in the Michigan Business Tax when it was eliminated. It’s important to reduce this burden on manufacturers since the manufacturers who are still in business in America provide good middle class jobs, but it’s critically important to replace that PPT revenue with another source so we are not crushing cities who have already lost so much revenue sharing.

A2P: You were a major proponent of education in Michigan, starting at the elementary school level and on up. Michigan Republicans currently seem to be on a crusade to slash per pupil funding, privatize as much of our education system as possible including, for the first time in our country’s history, teaching itself, and to strip away collective bargaining rights for unionized teachers. In your opinion, are these necessary actions in a time of economic decline? If not, what alternatives are there?

Granholm: Education is the single most important long term economic development strategy, not despite the downturn, but because of it. We must invest in human capital to get the best talent. In a global economy, you have to either compete on cost or quality. We will never be the cheapest place, nor should we try, but we can have the highest quality. The curriculum reforms that we undertook raised the bar for every child, but you need to make sure the teachers have the resources to get all children to jump over that higher bar. It’s not just about money, and it’s not just about reforms in the public school system – you need both. But you need to respect the collective bargaining process, and it needs to be public.

A2P: During your time as governor, you made a huge effort to promote manufacturing in the green energy sector (wind, solar, and battery technology.) Governor Snyder has ended some of these programs and eliminated the tax incentives for vehicle battery production. Do you think the investments that your administration made in this sector will continue to bear fruit or will Governor Snyder’s new approach kill it before it has had a chance to become established in our state? Do you fear these new green energy companies will choose to locate/relocate to other states that offer more attractive incentive packages?

Granholm: Let me make a general observation about the taxes and the clean energy economy, on the state and national levels. First, if you give across the board tax cuts, and businesses or wealthy individuals make investments, they make them in the global market. A business might take that additional money and invest it where they can maximize shareholder return. Multinational businesses are loyal to shareholders; they aren’t simply loyal to America. If we are not smart about tying tax policy to job creation in America, we may simply be facilitating the flight of jobs and investments elsewhere. The globe is attracting huge clean energy investments – last year, private sector invested $243 billion in clean energy jobs in the industrialized countries. The question is: where are those jobs going? We used to be number one, but in the past two years we dropped to number three because other countries are taking advantage of the fact that we don’t have national energy policy to get those investments and jobs. Is this okay? The reality is that other countries are partnering with business to make a good business case for them to be globally competitive. If we don’t do that, we will lose those jobs, period. It’s true on the state and federal levels. The worst thing we could do is pull the plug on the businesses we have recruited; believe me, other states and countries would be only too happy to step in.

A2P: This raises an interesting point. Now that the federal government is investing more in this area, does that allow states like Michigan to reduce their role?

Graholm: It needs to be done at both levels. The states are the ones that know what their strengths are and where the investments can be the most successful. The federal government needs to be working with them to target the best approaches so that we can compete on the global playing field. Again, this goes back to your earlier question. We have to be doing this because other countries are and their companies have a distinct advantage over us. We can’t have the federal government sitting on the sidelines. They need to be working together with the states.

A2P: As Governor Snyder makes his way to China this week, some are criticizing you for never having gone there. Although you traveled to Japan and other Asian countries, you never met with the Chinese. Why did you never travel there?

Granholm: First of all, the criticism is just ridiculous – we went to the places where we had deals ready for closing, and we just didn’t have that yet with China, but we were trying. My administration (Jim Epolito) and the MEDC, in fact, went to China as an arm of my administration to prime the pump. They went to India and other countries, too, when I didn’t have time to make the trips. We began to make plans to go to China and India toward the end of my last term, but with the auto meltdown and the recession, we had to cancel the plans. Not only do I not have an objection to going, I strongly encourage it. If there are deals to bring work to Michigan, why not go? People who criticize me for not going to China imagine I intentionally avoided it for some reason. Completely ridiculous. Those critics have absolutely no clue what they’re talking about.

A2P: In the final chapter of your book, you make a number of specific recommendations for changes at the federal level that will help our economy rebound. One of these is that the federal government must “get in the game.” In other words, the federal government should take an active role helping American businesses compete in the global marketplace. However, after indulging in an eight-year spending spree of their own, Republicans have suddenly decided that it is time to rein in spending, cut taxes and reduce the size of government in the middle of an historic recession. How realistic is your recommendation in our current political reality? Will President Obama be able to convince the Republicans that a bigger role for government is appropriate? If not, are there things he can do without their support?

Granholm: Well, I doubt that President Obama will be able to convince the House Republicans to do anything, actually. They seem to be determined to fight him on everything. But there are some things he can do. For example, he can task each Ambassador to get international business to come to America, and allow the embassies to be our recruitment arm. He can repurpose Department of Commerce or Energy dollars to create something I have been pushing for, a Race to the Top Jobs Competition, by executive order. He can accelerate the great job he’s doing on federal permit streamlining and bureaucracy busting. He can leverage technology to continually improve services and make the federal government more efficient. He’s already doing much of this but he should talk about it more so people know. But, ultimately, we need a paradigm shift about government’s role in helping states and regions compete. Republicans and Democrats have to understand that while its important to deal with the deficit, what’s most important is jobs and we will lose to our economic competitors if we remain passive in the face of aggressive action by other countries. We have to have the mindset that this is a global war for jobs.

A2P: During your time as governor, you appointed several Emergency Financial Managers for school systems and cities in Michigan. Earlier this year, Michigan Republicans revamped the law, giving far more power to these managers (now called simply “Emergency Managers”.) There are now legal challenges to the new law and a statewide petition effort to have it put on the ballot for repeal. Many feel that Public Act 4 disenfranchises voters and is an excessive state government intrusion into local government. Do you believe the appointment of these EFMs was your best course of action? What are your feelings about the law as it is now? Would you appoint EMs under this new law if you were still governor?

Granholm: I have said that I am not going to second guess my successor from the sidelines and jump into the middle of Michigan politics again. This is obviously an emotional and toxic issue; if changes are needed to sensitive statutes, one would hope it could be done in partnership WITH – and not done TO — those affected.

A2P: Let’s end on a positive note. I’ll ask you the same question I asked Dan Gilmartin from the Michigan Municipal League: What makes Michigan special? Why will ultimately succeed in bouncing back from our economic abyss?

Granholm: First we have to understand that there’s no automatic bounce; we have to create the bounce – it won’t just happen by itself. Our economic condition is not cyclical – it’s structural. There will not be a bounce simply because we have great universities or Great Lakes or people with a great work ethic. But you better believe we can take advantage of those fabulous assets. We need to continually work, every day, to diversify our economy and educate our citizens by investing in and trumpeting those assets. If that happens, if we continue to show the global community that Michigan is welcoming of international businesses and international citizens, if we invest in education and sectors that we know will make us competitive, we will succeed. It won’t happen overnight, but Michigan is not only resilient – Michigan is magnificent.

All photos by Anne C. Savage. Please do not reuse any photos without permission.

For more of Chris Savage’s writing, visit Eclectablog.