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Jennifer Granholm on Budget & Economy

Democratic Governor (MI)

 


Lower tax rates mean budget cuts, then more cuts

The spending cuts during my first four years in office were largely the inevitable consequence of the tax cuts pushed through by my predecessor, John Engler, in the late 1990s. With the state flush with revenues, those cuts sounded reasonable at the time. Lower taxes of course meant more money available for private-sector spending and investment.

When the boom of the 1990s ended--as booms inevitably do--the impact of the tax cuts on state budgets suddenly hit home. Without the cushion of an ever-growing economy, lower tax rates now meant less money for state services. And that meant budget cuts, cuts on top of cuts, and then still more cuts.

Source: A Governor's Story, by Jennifer Granholm, p.119-120 , Oct 1, 2005

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