DETROIT – Former Michigan Gov. John Engler, speaking Monday at the Detroit Economic Club, said five separate actions by Congress alone could lead to investment of as much as $1 trillion in the national economy. And while Engler was hesitant to discuss Michigan politics, Engler felt no hesitation in discussing the troubled finances of Detroit.
Engler said Mayor Kwame Kilpatrick had not met the potential he had shown in the Legislature and that he feared what might happen when the city’s school board goes back to an elected status. “Without quality schools, Detroit cannot fix its problems,” Engler said.
Engler also said that while manufacturers faced major challenges from global competitors, especially China, there are a series of policy issues that can be enacted by Congress that will require no approval by either the World Trade Organization or the European Union, and will provide critical certainty to corporations to enable them to make investments.
Engler issues facing the economy require an overall plan and action to reduce costs and remove barriers to trade and development. External cost factors – those not related to direct management decisions – add some 22 percent in costs over what manufacturers have to pay in those countries. The U.S. tax structure is higher, environmental regulations tougher, health care costs are the highest, and the cost of litigation all add the equivalent to $5 an hour to the cost of U.S. produced goods, he said.
If Congress acted on moving President George Bush’s energy plan – held up largely by disagreements over oil drilling in the Arctic National Wildlife Refuge in Alaska – more than 1 million jobs could be created as prices and supplies of energy resources would be stabilized and secured, Engler said. That would be critically important in the cost of natural gas alone, which drives production at many plants and which has risen in cost faster in the United States than in other nations.
He also said if the so-called clear skies legislation were to pass it would help boost electrical production, as well as end the threat to counties in Michigan not now in clean air attainment that could shut down construction projects. The U.S Environmental Protection Agency has implemented some of the provisions by rule, a move that has outraged environmental interests.
Engler also said legislation needs to be enacted to create a trust fund for victims of asbestos and put controls on new lawsuits. Asbestos related litigation in the nation has cost 60,000 jobs, and in Wayne County alone accounted for 95 percent of the product liability lawsuits filed in the county last year, he said.
Engler finished by touching on two subjects he dealt with frequently as governor: roads and broadband access to the Internet. Passage of the federal highway bill is critical to both make improvements and build new roads to move goods efficiently.
Development of high-speed Internet connections nationwide is crucial to moving communications. Passage of an updated telecommunications bill alone could be worth $600 million in gross domestic product
While there are opponents to various portions of these proposals, Engler said in a news conference afterwards that if Congress acts, changes can be made to areas that are problematic. The majority of any proposal would stay in place, and it would provide critical certainty to business executives to make investment decisions.p>
Asked if he supported Granholm’s proposal on the SBT, which is supported by the Michigan Manufacturers Association, Engler said he had not paid attention to the proposal and was not going to critique any plan.
“I’m not a fan of the SBT,” Engler said, referring to his legislation to slowly phase the tax out.
But as Granholm has called for improvements in education, Engler said schools, parents and students have to boost their education as well. Manufacturing is now a high-tech industry, and schools are not preparing students for the technical demands of the business.
Not everyone has to go to college to get a good job, Engler said to reporters, but everyone needs a skill.
Asked if Detroit could pull itself out financially and if the state would have to name a receiver for the city, Engler said, “No and maybe.”
He said he was disappointed with Kilpatrick’s performance as mayor. He has not shown the promise that he first showed in the Legislature, Engler said. Kilpatrick was a state representative from 1997-2001 and spent 2001 as the House minority leader.
But he also said Kilpatrick has “been saddled with the worst city council in the nation” making the council in Washington, D.C., seem like all-stars.
Engler, during questioning by the press, said the city should perhaps be willing to give up some of its “crown jewels,” although selling them now might result in too low a price. He particularly singled out the lighting department, which has been plagued with problems and complaints. Residents might get better service if the city paid the workers not to come in, he said.
He saved most of his criticism, however, for the state of the city’s schools. As governor he led an effort to put the city’s schools under the dual control of the state and the city’s mayor. In 2004, voters decided to restore the system to an elected board.
“I’m frightened by the prospect of an elected school board again,” Engler said. Under state control, “There had been hope where there had been none,” he said. Long term, no city can revive itself without good schools, Engler said.
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