Cover Story

Pocketbook Predictions
for Presidential Elections

by Patrick L. Anderson
February 03, 2012

(Note: In addition to their work on public policy issues, economist Patrick L. Anderson and his fellow economists at Anderson Economic Group LLC prepare a nationally recognized analysis of economic conditions and presidential elections. Their “Pocketbook Prediction” model was first presented in the spring of 2004 at Grand Valley State University’s Hauenstein Center for Presidential Studies and later won the Edward A. Mennis award from the National Association of Business Economists. Anderson prepared this exclusive preview for Dome on the 2012 election in the U.S. and in Michigan, in advance of his presentation at the Hauenstein Center on February 7, 2012.)

Political leaders since the ancient Romans have understood that the clearest way to maintain the favor of voters is to enhance their economic well-being. The manner of describing this has changed over time; Bill Clinton’s campaign mantra of “It’s the economy, Stupid” was an irreverent updating of the ancient Roman demand for “more bread and better circuses!” The fundamental principle remains the same.

However timeless the principle, it is frequently called into question by the advice, chattering and occasional analysis of the barrage of pundits, personalities, and talk-show experts who visit us every election year. Nearly every Dome reader can identify a dozen or more purely political factors that earnest practitioners of politics believe are vital to either the re-election of the president or the election of a challenger. Such factors could include enlightening the public; angering them; cutting through the clutter; muddying the waters; connecting with the Tea Party; assailing media bias; and, of course, raising money along with condemning the role of money in politics.

Economists over the past few decades have conjectured that economic conditions trump all these factors. Others have scoffed at such claims of “economic determinism,” and note that voters’ own statements suggest that the most important issues facing the country change over time. Furthermore, there is no denying the national fascination with polling data in the weeks and months before an election.

Back in 2004, my colleague Ilhan Geckil and I decided to take an honest look at just how important economic issues have been to American voters in the past. As an acid test of our analysis, we publicly announced our finding months before the 2004 election. We’re doing the same thing again in 2012, this time with two more elections under our belt.

The results, even nearly a year before the general election date and well before we know the nominee from the challenging political party, are quite revealing — both about the American voter and the likely outcome of the upcoming election.

Pocketbook Issues
“Pocketbook” issues describe the impression voters have when considering their family budget and the national economy. We assembled state-level data from 1980-2008 in addition to national data from as far back as 1916 on economic and institutional variables. With these data we tried to construct a model of a rational voter who rewards the incumbent party if his or her economic well-being was enhanced by voting for the incumbent party in presidential elections.

We focused on the popular vote, which each voter can directly affect, rather than the electoral college. Although the United States actually elects its president in the Electoral College, there is no question that political strategy played a major role in gathering electoral votes since the adoption of the U.S. Constitution. Indeed, it was only a dozen years ago that the United States elected a president who did not win a majority of the popular vote.

In particular, we looked at five categories of economic and institutional data, each of which we expect will affect voter behavior:

1. Income Growth. Income is a pure “pocketbook” indicator; more income typically means more votes for the incumbent.
2. Employment. Growing unemployment unnerves voters; fewer jobs typically mean fewer votes.
3. Inflation. High inflation (or deflation) hurts voters.
4. War. Voters rally around the commander-in-chief in a full-scale war, but they have a different view of limited wars.
5. Third-Party Candidates. Major third-party candidates, even though they rarely win major states, can affect the popular vote for the major party candidates.

It is important to note what the model doesn’t include:

• Any polling data
• Any sentiment data (such as “approval ratings” and expectations about the future)
• Partisan identification
• Union affiliation
• Campaign expenditures
• Media bias
• “Hanging chads”
• SuperPACs
• Debate performance
• Charisma of the candidates
• Weather on Election Day
• Campaign strategy
• Cleverness of campaign advertising.

Further, we excluded policy positions, ideology, and experience. Of course, we not only believe these things (especially the latter ones) do matter to voters, we think they should matter to voters! Thus, the “pocketbook” model isolates, on purpose, economic conditions from all the other factors. If such a model explains the outcome of elections well, it means that voters really do vote their pocketbook.

Track Record
Looking at U.S. presidential elections from 1916 to 2008, we learned some interesting things both about U.S. voters and their interest in “pocketbook issues”:

• Elections became far more competitive after the 1950s. Indeed, the statistical variance in the difference between the winning and second-place candidate was about 50 percent higher for elections of 1916 through 1960 than for those from 1960 through 2008. Lopsided results were common in the first half of the century, but relatively few true landslide elections (where the difference in popular vote between the major parties was more than 10 percent) have occurred since then.
• Voters after 1960 became more predictably focused on economic conditions. The differences between the predictions from a pocketbook model and the actual voting results became much smaller in the last 52 years.
• Taking the 24 elections from 1916 to 2008 as a group, a pure pocketbook model explains about 75 percent of the popular vote differential between the incumbent party and the challenging major party.
• The “standard error” of the model — the portion of the vote margin that appears to be completely unexplained — is around five percentage points, depending on the specific time period and specification of the model. Although the comparison is not exact, that level of uncertainty is not very different from the error in large-sample public opinion polls taken in the months before an election. For example, the CNN “poll of polls” showed the 2008 election as a dead heat between Obama and McCain in early September 2008 — an election Obama won with over a 7 percent margin two months later. George Bush was behind John Kerry in some national polls in October 2004 — an election he won by 2.5 points less than a month later.
• Good (and bad) economic news in an election year seems to matter more than in the early years of a term.
• Voters among the states vary considerably regarding their response to pocketbook issues, and they have strong partisan leanings that are predictable over time.

2000–2008 Elections
Our pocketbook model correctly predicted the results of the 2000, 2004 and 2008 elections to a remarkable degree.

In 2000 a slight slowdown in the economy, relatively low inflation, and peacetime suggested that the incumbent party would narrowly win the popular vote. Indeed, the pocketbook model indicated about a 4 percent margin for the Democrats, and the voters gave them the popular vote by about a 0.5 percent margin. Of course, the Republicans won the Electoral College.

In 2004 improvement in the economy and continued low inflation suggested that the incumbent should win, even though there was a limited war being fought. Both the voters and the pocketbook model gave the incumbent party the popular vote by about a 2 percent margin.

In 2008 a sharp downturn in the economy occurred late in the election year, and the limited war continued in the Middle East. The pocketbook model suggested that voters would favor the candidate from the challenging party by about 9 percentage points, and the voters gave the nod to the challenger by over 7 percentage points.

Indeed, the predictions based on a pure pocketbook model for the last three elections were so close to the actual results that they proved at least as accurate as large-sample opinion polls taken two months before the elections! We’re not promising that voters will be that predictable in the future, but they certainly have been over the past decade.

What’s Ahead for 2012?
Although we have just begun the year 2012, we can preview the pocketbook scorecard using some assumptions about the national economy and the likelihood of a third-party candidate:

• The economy since 2008 has been the worst for any incumbent since Jimmy Carter faced the voters in 1980. Families have endured very high unemployment and sluggish income growth.
• Inflation is relatively low, but creeping up.
• No significant third-party candidate has yet emerged who would capture a significant share of votes in multiple states.
• Of the limited wars being fought in the Middle East, it appears that American involvement in one (Iraq) is winding down, while continuing in Afghanistan.

Although the technical details of the forecast will be released at the February 7 Hauenstein Center event, the direction here is clear. Pocketbook voters are very unlikely to reward an incumbent party with this type of economic record with a popular vote margin.

That implies the candidate of the Republican Party is, at least on pure economic and institutional conditions, likely to capture the White House in 2012.

What Could Change
We noted above that voters tend to reward economic improvements in an election year. The national economy (as well as the economy in Michigan) is improving, and the degree of that improvement over the next 10 months will be critical. In particular, an uptick in employment that is faster than expected could give pocketbook voters a reason to reward the incumbent.

In addition, our model confirms one thing that political analysts have been saying: the entry of a significant third-party candidate could, for the pocketbook model and, more importantly, for voters, change the outcome. Similarly, “bringing the troops home” remains a potent political message to U.S. voters.

Michigan Voters
Although the national popular vote in presidential elections has become more predictable — and competitive — over time, the same cannot be said about presidential elections within the states. Our analysis of the 20 most populous states confirms the common understanding that there are “red” and “blue” states that lean heavily in one direction or the other. That doesn’t mean that state voters aren’t “pocketbook” voters — but it does mean that in each state they start thinking about their pocketbook from different starting points on the partisan spectrum.

Michigan is an interesting case. In recent presidential elections it has leaned so far to the Democratic side that some no longer consider it a “swing state.” Our analysis shows that Michigan voters — at least in presidential elections — are still pocketbook voters. Indeed, it appears that Michigan voters track changes in the economy more closely than those in many other large states. However, a Democratic incumbent president starts with an advantage in Michigan, and the economic duress of the state chips away at that advantage.

Pundit Go Home?
One might read the track record of a pure pocketbook model and conclude that there is very little to watch over this election year — that it’s all over except for the voting, so switch the channel and come back in November. That would be an incorrect conclusion, because it ignores probably the most important finding of our work: economic issues explain only about three-fourths of voter decisions.

Three-fourths is a big share — but it is not the entire pie! American voters have proven time and again, that they like to be in charge. This year will be no different.

And, for all my friends in the pundit, consultant, campaign management, and polling business, do not worry. As long as there is a democracy, there will be work for you!

Patrick L. Anderson is principal & CEO of Anderson Economic Group LLC, headquartered in East Lansing. He founded the firm 15 years ago after serving as deputy budget director for Gov. John Engler and chief of staff for Secretary of State Candice Miller.

(Author’s technical note: The Anderson-Geckil “pocketbook” model is estimated using data from a variety of sources covering economic conditions and institutional factors in the U.S. from 1916 to 2008, the 20 largest-population states from 1980-2008, and predicted economic conditions for 2012. The econometric techniques used include standard linear regression as well as more advanced weighted, panel, and robust regression techniques. An extensive description of the model, including summary statistics and descriptions of the estimation techniques, is contained in the 2004 article “Pocketbook Predictions of Presidential Elections” in the journal Business Economics.

The model is intended primarily to explain the decisions of voters rather than to predict the outcome of elections. As with any other econometric model, many variables are not included due to lack of data. Further, any prediction using this, or any other econometric model, relies upon factors that cannot be known in advance. Additional econometric information will be available on the Anderson Economic Group website.)

Columns

John Lindstrom
Gongwer News Service

Right to Work
Right for Michigan?

February 3, 2012

Hold on a moment, wasn’t all the attention in Indiana this week supposed to be focused on some kind of a football game? What’s all this Right to Work stuff?

Consider this a reminder of your right to work at reading columns filled with pseudo-wisdom and specious insight. Consider it also a reminder of the importance of remembering the obvious.

And the most obvious thing to keep in mind is that the action by Indiana to enact a Right to Work law — the title of which forces the question of who really does not have a right to work — will put enormous pressure on politics in Michigan. Enormous pressure.

Governor Rick Snyder has already hedged slightly his persistent comment that he does not want to be involved in a Right to Work fight. He has hedged it by saying he does not want to be involved in such a fight this year, and that it may be appropriate to look at the issue in future years.

Supporters of a RTW bill in Michigan are aggressively trying to raise money for an intense pitch to the legislature to support a RTW proposal, and urging their followers to impress their support on lawmakers.

Labor had already made it clear that opposing a RTW law was a primary agenda item for it in 2012. While union officials have not yet said what additional steps they will take in light of Indiana’s action, one has to expect the fight will intensify dramatically. Opponents of RTW have already taken to the social media electron zones to urge a greater effort to fight RTW.

Business groups largely took a pass on supporting RTW in 2012. They argued this was to give them time to study the issue more fully. One suspects their study will speed up with the potential for action sooner rather than later.

Legislative supporters of RTW have been relatively coy in outlining what their plans are. Probably the most publicly recognized supporter of RTW, Rep. Mike Shirkey (R-Clark Lake), said he hopes to have a bill ready before the legislative spring recess. Frankly, that seems a long time to get a bill, but as was said, things are being played a bit coyly.

Some observations:

It’s unclear why anyone thought there was ever a chance RTW would not pass in Indiana. Governor Mitch Daniels wanted it, so he got it. Mr. Daniels is rarely denied, and in the end passing RTW was not all that tough in the Hoosier state. What was tough in Indiana was getting the state to accept daylight savings time, and Mr. Daniels did that. No, no, the only issue regarding passage of RTW in Indiana was when it would occur.

It’s not just Michigan that will feel the pressure to enact a RTW proposal. The entire Midwest will now have to confront the issue. Before Indiana acted in the immediate Midwest (before one moved into the plains), just Iowa had a right to work law. Pressure is already building publicly in Ohio and Minnesota to enact a RTW law.

As was pointed out above: who doesn’t have a right to work? Okay, what legal adult not incarcerated doesn’t have a right to work? This question deals mostly with the political necessity of plowing our poor brains with politically acceptable semantic silliness. So instead of pro- or anti-abortion rights, we say pro-choice or pro-life. The issue in RTW is union or no union, not whether one has a right to work.

RTW supporters amongst themselves rarely talk of the worker not permitted to express his or her individual feeling about joining a union, but will discuss overall cost issues vis a vis unions or no unions.

Arguing the question of cost, it’s clear many states that prohibit closed shops (closed shops being those that require union membership as a condition of employment) do have a cost advantage over states that permit closed shops. But looking at it from a global perspective, well, the U.S. loses compared to many other nations in terms of cost. So, does RTW help build overall competitiveness? Since everyone is eager to say we live in a global economy, the answer is unknown.

Just looking at the differences between RTW and anti-RTW states in terms of unemployment, it’s also hard to say what overall effect it has on employment and development. The state with the lowest unemployment rate in December, according to the U.S. Bureau of Labor Statistics, was North Dakota, which is a RTW state. The state with the highest unemployment rate is Nevada, which is also a RTW state.

Now, the top three states in terms of unemployment are all RTW states, but most states, both RTW and non-RTW, had December unemployment rates less than the nation’s 8.5 percent. And there were 10 states with December unemployment rates worse than Michigan’s 9.3 percent rate, and six were RTW states. So does RTW help employment prospects? Again, unknown.

What about income? There the non-RTW states blow the RTW states out of the water. At least they do when looking at median household incomes.

In 2009 the median U.S. household income was $50,221. A total of 20 states bested that (Michigan did not, sadly), and of those just four were RTW states: Virginia, Utah, Nevada and Wyoming. In calculating household income the states that seemed to do best had either high levels of high-tech industries (such as Massachusetts, California, Washington), government employment (Maryland, Delaware and Virginia), financial industries (New York, New Jersey and Connecticut) or energy resources (Alaska and Wyoming).

Also, states with healthy overall industrial mixes, such as Illinois, Minnesota and New York, were represented. States with predominant heavy industries (such as Michigan and Ohio), a heavy reliance on agriculture or low-tech industries tended to have lower household incomes. So it seems the types of industries a worker is employed in, rather than the rules governing unionization, plays a greater role in wealth development, which affects economic development.

Is not the question of whether RTW is right for Michigan, or any state, more a question of control over a company? Is it not more a question of who has ultimate authority over corporate actions and decisions? Ironically, could not one argue the government should set nothing at all in terms of statutes allowing or disallowing closed shops? That owners and workers should be left to themselves to decide the issue?

Oh, let’s not get lost in economic metaphysics. Let us focus on the immediate politics of the situation.

And the most interesting political aspect to factor now is Mr. Snyder saying 2012 may not be the year for the issue.

Here’s the question: could 2012 be the only year it would get serious consideration, at least for the immediate future?

Consider, Republicans have comfortable control over the legislature now. On this day, it is very uncertain how the November election will go, nationally and in the state. Despite the GOP having overwhelming control of the Michigan House, Democrats feel they have an honest shot at retaking control of the chamber. Why? Well, if the economy continues to improve it will help President Barack Obama (don’t forget national unemployment was around 7.4 percent — hardly robust — in 1984 when President Ronald Reagan won his morning in America landslide), and issues such as RTW will fire up labor and Democrats in ways Republicans could shudder at.

Remember that in Ohio in November the voters soundly trashed what Governor John Kasich had favored and which was seen as stridently anti-labor.

Remember as well that union membership actually increased in 2011 nationwide. Unions still are not the most popular kids on the block, but by and large people still feel decisions on union representation have to be worked out between companies and their workers.

Those considerations may make Michigan Republicans pause before pushing RTW more intently before the election. If they hold onto the House (remember, the Senate is not up for election), it may give them partisan cover to push the issue in 2013.

But what if they approve a bill before the election, what then would Mr. Snyder do? Given his history, one would have to say he probably would sign the bill. Mr. Snyder thus far has acted to give the legislature wide concurrence to its actions. Also, he has never quite said he opposes RTW, just that he doesn’t think it should be pursued.

So, even if Democrats pull off a stunner and win control of the House starting in 2013 — and the legislature has enacted an RTW bill — the newly Democratic House could not overturn the law on its own.

Say the legislature does not enact RTW before the election and Democrats do win House control. Then watch for something to happen during the lame-duck session.

Or take the legislature out of the equation: would there be an attempt to take the issue directly to the voters? And if so, what whole new set of political dynamics would that create?

With all these facts and factors to consider, with all the strategies and tactics to ponder, it should provide one with plenty of fun for this weekend. Surely, you have nothing to do on Sunday, February 5, so hold a party that evening to talk it all over. Won’t be anything worth watching on TV.

John Lindstrom is publisher of Gongwer News Service. For more than 50 years in Michigan, Gongwer News Service has provided independent, comprehensive, accurate and timely coverage of issues in and around Michigan’s government and political systems. For subscription information, including a free trial, visit Gongwer online.

Columns

Jack Lessenberry

Bridge Blockade

February 3, 2012

DETROIT — Americans are justifiably outraged whenever a lawmaker is caught taking bribes or misusing public funds. Think Kwame Kilpatrick, for example.

But what do you suppose the voters’ reaction would be if it were discovered that one very rich family was trying to buy off the legislature solely for their own financial gain? What if that family spent a small fortune on what amounted to legalized bribes to successfully block a project that virtually every corporation in the state agreed was essential to Michigan’s economic future?

This would be a project that would create thousands of jobs, win the state billions in federal highway grants, and wouldn’t cost taxpayers a cent. But lawmakers killed the project because the rich family showered them with money.

Wouldn’t you expect massive outrage?

Well, guess what. That’s exactly what’s going on in Michigan. The latest proof arrived this week, when the latest round of delayed campaign finance reports became public.

But sadly, there seems to be little reaction — in part because the rich family has also spent millions on blatantly false TV and radio commercials and direct mailings meant to mislead the public.

We are talking about the family of Manuel J. “Matty” Moroun, the 84-year-old billionaire who owns the aging Ambassador Bridge.

Governor Rick Snyder has made it a top priority to build a second bridge a couple of miles south, known as the New International Trade Crossing. Every other living former governor supports a new bridge.

So do most other politicians, the CEOs of Ford, Chrysler and General Motors, and virtually every chamber of commerce in the state. Republicans in the Ohio Senate voted unanimously on support of a new bridge. The government of Canada wants this bridge so much it has agreed to pick up Michigan’s share of the costs, which the state could repay years from now out of its share of the tolls. Washington clearly favors the new bridge.

Astonishingly, the Obama administration has said that Michigan could count the $550 million Canada is willing to pay for Michigan’s share as matching federal highway funds. That would mean $2.2 billion to fix Michigan roads, no strings attached.

But the governor hasn’t even been able to get a vote on his bridge in the legislature, and here’s why. The Moroun family has contributed hundreds of thousands of dollars, possibly millions, to state legislators who have done his bidding and blocked the bill.

This became apparent this week, thanks to incomplete, but just released campaign finance records. They show, for example, that Matty Moroun, his wife Nora, and his son and daughter-in-law gave at least $242,000 to various state-related political funds.

On the key Senate committee considering the bridge last year, only two of the seven lawmakers didn’t receive campaign contributions from the Morouns in the 2010-11 period: David Hildenbrand (R-Lowell) and Tupac Hunter (D-Detroit). Direct contributions to the other five ranged from totals of $500 to $4,000. Sen. Mike Kowall (R-White Lake), the committee chair who was instrumental in preventing a bill backing the bridge from reaching the Senate floor, received a total of $1,000 in 2011.

Not all of the Moroun money was direct contributions to legislators’ campaign committees. For example, the Morouns also channeled resources to Kowall’s campaign fund in other ways, according to Rich Robinson, who runs the nonpartisan, nonprofit Michigan Campaign Finance Network. Campaign finance records show that Moroun and members of his family gave a total of $50,000 to an organization called Knights of the Round Table in 2010. The Round Table gave $12,000 to the North Oakland Political Action Committee in 2011. The Morouns also gave $4,000 directly to the North Oakland PAC. The North Oakland PAC gave a total of $6,144 in in-kind goods and services to Friends of Mike Kowall in 2011 and $3,144 in in-kind goods and services to Friends of Eileen Kowall the same year.

“The North Oakland PAC was being used as a vehicle to get goods and services to the Kowalls’ campaigns,” said Robinson, who spends a lot of time analyzing campaign finance reports. Kowall’s wife, Eileen, is a state representative who also opposes the bridge.

You might think the Michigan Republican Party would have joined its governor and the state’s business interests in backing the bridge. But they haven’t. This week we may have learned why. The Morouns gave $100,000 to the Michigan GOP last year.

They also gave $20,000 to help real estate developer Bobby Schostak’s successful drive to be appointed state party chair.

The total amount of money the Morouns gave to politicians is fairly amazing, given that last year wasn’t an election year. In addition to the money spent at the state level, the family gave more than $368,000 to federal campaign committees in 2011.

Nor is that figure complete. Some state legislators haven’t yet filed their annual reports. The Morouns, whose wealth is conservatively valued at $1.5 billion by Forbes, also are known to be big givers to political action committees. But donations given to PACs late last year aren’t required to be reported till April.

They are also reliably reported to be donating to campaigns now — but as Michigan law stands, we won’t know to whom and how much for months. Robinson thinks this is outrageous. The legislature could easily enact laws making campaign finance reporting more timely and far more transparent.

But lawmakers seem to have little interest in that.

Beyond the shadow of a doubt, what is happening is that an 84-year-old billionaire with a monopoly over America’s most economically important trade crossing is trying to buy our government to further his family’s own financial interest.

Independent observers agree that stopping the construction of a new bridge has cost the state jobs and billions of dollars, and has, in the words of Canadian Consul General Roy Norton, put this region’s economic future in jeopardy.

Actually, they’ve done more than try. “I’d have to say, so far, they have succeeded,” Robinson said.

Yet Gov. Snyder still vows to get the bridge built. Whether he can overcome the Morouns remains to be seen.

Veteran journalist and national Emmy Award winner Jack Lessenberry teaches at Wayne State University, serves as Michigan Radio’s senior political analyst and writes regularly for several publications. He also serves as The Toledo Blade’s writing coach and ombudsman and is host of the weekly television show Deadline Now on WGTE-TV in Toledo.

Columns

Rich Robinson

Monetizing Democracy

February 3, 2012

This is campaign finance orthodoxy in early 2012: Corporations are people, money is speech and democracy is when my billionaire whups your billionaire.

Comedians have lampooned the silliness of the first strained equivalence. You know: We’ll accept that corporations are people when Texas executes one, or when Mitt Romney is charged with mass murder for serial dismemberment of his adopted children as CEO of Bain Capital.

But maybe you hold tightly to the idea that money is speech. Maybe you think Jack Abramoff went to prison for something he said to somebody. Or maybe you think former congressmen William Jefferson and Duke Cunningham went to prison because of something that was said to them.

I think Justice John Paul Stevens had it right years ago: “Money is property; it is not speech.”

So, if contemporary politics is about property rights, maybe regulations that prevent a person, corporate or otherwise, from hiring all the politicians he can afford are takings. That’s no more preposterous than saying money is speech. All things are monetized in America, including the quaint old notion of democracy.

Still uneasy? Don’t worry. No less than a 5-4 majority of the highest court in the land has explained away the peril of corruption posed by multi-million-dollar campaign supporters. In their view, a candidate is independent of the millions spent by his campaign patrons, as long as those millions are invested with the manager of his last campaign and not the manager of this year’s campaign.

I think most of us recognize that as pious bologna. Newt Gingrich did until Sheldon and Miriam Adelson changed his thinking with $10 million donated to the SuperPAC Winning Our Future.

The Center for Responsive Politics reports that there was a total of $31 million in independent spending in the 2002 federal midterm elections. By the 2010 midterms, independent spending had grown to $489 million, and the Colorado senatorial campaign alone saw nearly $37 million in independent spending.

In Michigan’s three hotly contested congressional races in 2010, there was $30 million spent, $19 million by third-party groups. Where there is true competition, the candidates’ role has been shrunk dramatically.

At the dawn of the age of the independent spenders in the 2004 presidential race, the vehicles for independent spending were fully disclosed political party committees and 527 committees. The Center for Responsive Politics reports that more than 98 percent of independent spending was disclosed by its source in 2004.

But after Citizens United invited corporate actors to be full participants in campaigns and elections, 501(c)(4) and 501(c)(6) organizations became favored fund-aggregating vehicles and the percentage of independent spending that was disclosed by its source dropped to 71 percent in 2010. Given the Federal Election Commission’s lack of interest in accountability, we should expect the volume of independent spending to go way up in this presidential election year, and the percentage of that spending that is disclosed by source to drop.

So much for transparency and accountability.

Michigan elections pioneered the practice of independent spending by undisclosed campaign supporters years before Swift Boat Veterans for Truth was a twinkle in the eye of Houston developer Bob Perry. The 2000 Michigan Supreme Court campaign had more independent spending than candidate spending and most of it was off the books. My research in the public political files of Michigan television broadcasters and cable operators has uncovered $70 million in candidate-focused television advertising from 2000 through 2010 that was completely outside the state’s campaign finance reporting system.

Standards of transparency and accountability hit rock bottom in 2010 when the Supreme Court, gubernatorial and secretary of state campaigns all registered 50 percent, or less, on the Dashboard of Campaign Finance Accountability (download). The attorney general campaign was a rather poor high point, with 55 percent of campaign spending disclosed.

We may not be able to claim that we invented the idea of a race to the bottom, but I’m pretty sure we won.

Against this sordid backdrop, it was a note of hope to hear Governor Snyder declare during his recent State of the State Address that he sees a need for ethics, lobbying and campaign finance reform. He even articulated a specific proposal: We should have more frequent campaign finance reporting.

Coming as it did, at the end of a 14-month campaign finance reporting hiatus for state officeholders, this idea should be self-evident. After all, shouldn’t citizens have a right to know which interest groups are giving money to public officials while the donors’ public policy interests are under consideration, not long after the fact? It certainly wouldn’t be an onerous regulation to require all political committees — candidate committees, party committees and PACs — to report at least quarterly, in addition to established pre- and post-election reports.

That should be a starting point. Next, the governor and legislature should address the shameful gap in campaign accountability that has allowed $70 million of campaign television advertising to go undisclosed.

Any mass media communications that include the name or image of a candidate within the months preceding an election should be reported, and the donors who provided the money should be identified, regardless of whether the communication contains words of “express advocacy.” In the lesser noted aspect of the Citizens United decision, an 8-1 majority of the Supreme Court made an unambiguous statement that such a disclosure requirement is constitutionally permissible.

If there is still energy and will for one more item on the starter list, I’d suggest that the governor propose and the legislature affirmatively dispose of a requirement for more thorough lobbying disclosure. The Detroit International Bridge Company spent $6 million in 2011 for television ads telling viewers to contact the governor and their legislators to oppose a new public/private bridge between Detroit and Windsor. Yet, the DIBC isn’t even registered as a lobbyist.

Maybe DIBC officials didn’t register and report that activity because the lobbying was indirect. That is, they told viewers to lobby officeholders instead of speaking to officeholders directly. If the law really allows nondisclosure of lobbying that includes a bank-shot, our law needs to be fixed — pronto.

I think we’ll get real momentum in reinventing Michigan after we see some serious accomplishments in reinventing Michigan politics. I admire the governor’s interest in transparency and accountability. Even if interest groups don’t, I think most citizens do.

Rich Robinson is executive director of the Lansing-based Michigan Campaign Finance Network, a nonpartisan, nonprofit organization that conducts research and provides public education on money in Michigan politics.

Columns

Neil Munro

Path to Redevelopment

February 3, 2012

So what do we do with Pontiac and Flint?

The dramatic shrinking of General Motors Corp. has left the former factory towns municipally bereft. In 1970, the peak of the automaker’s heyday, Flint’s population topped 190,000 and Pontiac’s 85,000. Now GM is all but gone and they barely have 100,000 and 60,000.

That’s a lot of empty houses!

What are the odds that another major employer will come along soon and help fill them up again? They’re not good. GM typically is razing factories, not mothballing them for a better day.

And it is not as though the workers’ houses have been vacated in large and adjacent groups that could conveniently become large salable parcels. More typically, the observation is that too often it’s every other house that is vacated.

Time alone can do the job, if we have enormous patience. In Michigan’s Keweenaw Peninsula former copper-mine region, an occasional rusty fire hydrant in tall grass can be the only hint a site was urban until a half-century ago.

Closed factories eventually can disappear, too, but who wants to wait? And some seem indestructible. Witness the Packard plant in Detroit. That struggling city now barely tops 700,000 in population, when some 50 years ago it had nearly two million residents.

Pontiac is fortunate to be in the center of Oakland County, which otherwise is generally thriving and not heavily dependent on manufacturing to provide jobs. Flint in neighboring Genesee County is not so lucky. It has far fewer relatively prosperous neighboring municipalities.

To complicate matters, the typically small residential lots in such relatively old cities don’t easily lend themselves to redevelopment. Larger ones are available in adjacent suburban neighborhoods.

A generation ago federal Urban Renewal programs sometimes picked up most of the cost of razing old downtowns and dilapidated residential areas, with the aim of seeing them rebuilt by eager entrepreneurs.

But the process often took 10 or 15 years to complete and, too often, just didn’t work. Pontiac’s city center includes an example of acreage that was leveled under that program, remained empty for decades and still can’t be called fully redeveloped. That’s even in the midst of relatively prosperous and urban neighboring municipalities.

The mass exodus of industry and residents has had, of course, a huge and negative budgetary impact on cities such as Flint and Pontiac. The latter, for example, has lost more than $50 million in tax revenue from factories and families just since 2005.

All this should concentrate the minds in the region, and in Lansing, on what can be done about this unfortunate state of affairs.

Apart from tornadoes and earthquakes, we make most messes ourselves. And this is no exception. Both Pontiac and Flint are, for all practical purposes, part of the same huge human settlement in Southeast Michigan. Yet we have sort of absentmindedly decided that to handle our civic affairs within it we need the 136 cities, villages and townships within Wayne, Oakland and Macomb Counties, not counting the cluster of municipal neighbors adjacent to Flint in Genesee County.

A regional municipality in either place would be able to cope with the collapse and/or departure of a major employer here and there. But when, as with Pontiac and nearby Flint, it’s basically been one dominant industrial taxpayer per city, the economic and social impact obviously gives new meaning to the word devastating.

Fortunately, in some 600 “community conversations” throughout the state, the Center for Michigan found that money-saving consolidation of local services across local government boundaries was favored by nine of 10 respondents!

So why doesn’t it happen? The vast majority of elected officials who worked to that end would be consolidating themselves out of a job.

But without that change how can the economically devastated Pontiacs and Flints of the region ever attract the necessary new development? The existing high tax rates simply will not be lowered until municipal consolidation is in place to attract new business and industry.

Let’s at least give Pontiac, Flint and the rest of the metro area this path to prosperity. Without it, their economic future is dim indeed.

Neil Munro is a retired editor of The Oakland Press.

Columns

Tom Watkins

Guess Who’s
Coming to Dinner

February 3, 2012

Guess who’s coming to dinner, and on Valentine’s Day no less. None other than the future president of China.

Hu?

No, Vice President Xi (pronounced “shee”) Jinping. He is coming to the White House during the 40th anniversary this month of President Richard Nixon’s historic visit to China.

The likely next (s)elected president of China will be the guest of Vice President Biden, after Vice President Xi hosted Biden in China last year. President Obama has asked his vice president to coordinate the administration’s U.S.-China policy.

The current Chinese vice president is expected to succeed President Hu Jintao in a once-a-decade leadership change this year, around the same time the U.S. elections will take place. So while democracy elects, the Chinese Communist Party selects.

Why should we care? Because going forward, all major issues impacting the world will intersect at the corner of Beijing and Washington, DC.

As with many issues in China, gathering intelligence for a full picture of China’s leaders and their backgrounds is difficult.

So exactly who is Xi and what will his leadership mean to the world and, most importantly, to the U.S.?

We do know him as a “Chinese princeling,” the son of revolutionary hero and former Mao Zedong comrade Xi Zhongxun. He will be the first “princeling” to lead the country.

Xi Zhongxun, like Deng Xiaoping, China’s former leader who opened China to the world, was purged three times by Mao. He served as deputy prime minister from 1959 until 1962 and his falling out with Mao for the first time.

As a teenager, Xi Jinping suffered like many youth in the ’60s during the Cultural Revolution, having his education interrupted seven years when he was sent to the countryside to learn from the masses. And Xi, like most of China’s leaders, is an engineer. He also has a law degree. His wife, Peng Liyuan, is one of China’s most famous and celebrated folk singers and an army major general.

Part of the new fifth generation of Chinese leaders, Xi was born in June 1953, in Shaanxi province, a poor region of northwestern China. His rise to the top was apparent when a Communist Party Central Committee plenum appointed him vice chair of the military affairs committee that oversees China’s armed forces.

The appointment means that Xi is on target for the top three jobs in China: secretary of the Communist Party, state president, and civilian head of the military. The Communist Party rules over all in China. He will be known outside China as “President Xi,” however, the Communist Party post is where the true power lies.

Deng Xiaoping rehabilitated the senior Xi when Deng returned to power after Mao’s death in 1976. Xi Zhongxun was an economic reformer and was appointed governor of Guangdong Province by Deng Xiaoping in southern China, leading the liberal economic policies launched by Deng at the end of 1978.

The elder Xi is credited with the creation of the first Special Economic Zone (SEZ) in Shenzhen, which grew from a small fishing village near Hong Kong to a bustling, super-modern city and manufacturing center. Today, Shenzhen’s population exceeds 10 million, as migrants pour from rural villages across China to help make Shenzhen ground zero in China’s rush to become the factory to the world.

The incoming president’s father, ever a reformer, sided with former Community Party General Secretary Hu Yaobang, who had been purged for his support of political liberalization and whose death triggered the Tiananmen Square “Incident in 1989.” Xi Zhongxun later condemned the military crackdown on the Tiananmen Square protesters on June 4, 1989.

Incoming president Xi was described in a 2011 Washington Post column as “pragmatic, serious, cautious, hard-working, down to earth and low-key”…and “a problem-solver and a leader.”

Xi Jinping will need all those attributes to govern the fastest-growing large world economy, home to one-fifth of the world’s population and where, as Cheng Li, a China expert at the Brookings Institution says, “The Chinese public is particularly resentful about the princelings’ control of both political and economic wealth.”

If the people become disenfranchised and subsequently act out their dissatisfaction, social order might well quickly become paramount, as the greatest fear of the communist leadership is losing control.

Xi Jinping will need to heed the words of Deng Xiaoping, who responded when asked about his plans of steering the Chinese economy after Mao’s death, “We will cross the river by feeling for the stones.” President Xi needs to step carefully to navigate the various hazards, internal and external, to China.

Will Xi Jinping, like his father Xi Zhongxun, become a 21st century reformer? If so, what form will his changes take?

If he inherited his father’s genes and embraces reformist impulses, the next decade might well prove an interesting ride for China and the rest of the world.

Yet, Xi came of age during the convulsion of the Cultural Revolution, with a bird’s eye view of the 1989 Tiananmen Square Incident, when the People’s Liberation Army turned its guns on its own people.

There can be little doubt that Xi will continue the focus of retaining the ultimate and complete power of the Communist Party while striving to maintain social control and stability and expanding economic growth.

Without sustained economic growth and a sense by the people that their lives are improving, the “mandate from heaven” allowing the communists complete rule might begin to unravel.

China’s leaders face several economic and social problems: inflation, credit and housing bubbles that are bursting, slumping housing sales, export markets that are tanking around the globe, and fears of internal unrest sparked by minorities — Mongols, Tibetans and Uyghurs.

Labor unrest in manufacturing regions in south China are feared to be the “spark that could ignite a raging forest fire,” as Mao famously said.

Wherever incoming president Xi looks — internally, around the globe, or to America — he can see the unrest that is sparked by economic decline.

In China, relationships matter. It is important that our leaders develop a deep relationship with the incoming leader of one-fifth of all humanity and a rising economic and military power. May our and China’s leaders find ways to work together in an open and cooperative manner, as though our collective actions impact all of humanity — because they will.

Welcome to America, Vice President Xi Jinping.

Tom Watkins, has been working to build economic, cultural and educational bridges with China for nearly a quarter century. A former Michigan state superintendent of schools, he is currently a U.S.-China business and educational consultant.