Buy Now, Pay Never
Michigan has had a hard time for the past few months. Its budget has been unbalanced by falling income, and expenses have been increased by welfare charges. Indeed, by the accounts of conservatives, the entire concept of the welfare state is crumbling in the near bankruptcy of Governor G. Mennen Williams' Presidential hopes.
There is no doubt that Michigan is in serious trouble. By the beginning of the year, it was in arrears on its payments to Michigan State and the University of Michigan, was behind on contractors' fees, and could not make its contributions toward the teachers' retirement fund. In mid-February the situation was momentarily eased by early payment of taxes by several corporations, but even then Williams continued to call the situation "critical."
When the legislature convened a few weeks ago, the governor made a desperate plea for a constitutional amendment to permit increase of the debt limit from $250,000 to $50 or $100 million. Last week it was fairly clear that no such amendment would be put on the ballot, and that Michigan Republicans were perfectly happy to let Williams figure a way out of a mess for which they considered him responsible.
In fact some doubt exists among Republicans as well as Democrats whether the idea of a welfare state is completely responsible for Michigan's dilemma. Highly industrialized and dependent on the auto industry, the state was very hard hit by the recession, and unemployment has ranged between twelve and fifteen per cent of the working force. With employment off, tax revenues dropped--the sales tax income went from $323 million to $296 million--but the expenses rose. As communities exhausted their unemployment funds, for example, the state took over.
Believing that the state's troubles lay primarily in its concentrated industry rather than in liberal economic measures, Williams, Walter Reuther, and Louis Miriani, the mayor of Detroit, asked for a $380 million federal area redevelopment bill to broaden the base of the economy.
Despite Williams' desperate attempts to repair the economy, however, there is no question that his name has become closely linked with the state's troubles in many minds. Although he had been considered a possibility for the 1960 presidential nomination, the current crisis has almost ruined his chances. Even more damaging has been his alignment with liberalism, one which conservatives have gleefully seized as indicative of weakness in the entire Michigan Democratic movement. U.S. News and World Report ran Reuther's picture next to that of Williams in its coverage of the situation, although Reuther had almost no part in the story.
In an atmosphere where business is heavily taxed, Wililams' opponents have claimed that his policies brought on the present situation by discouraging new investment, but there is little question that their criticism of his welfare-at-any-cost policies are much closer to home. In the midst of the attempts to pay current expenses, Williams was reported to be planning a budget increase of $150 million for fiscal 1960. Observers seem to think that he will succeed in bailing out the current debts through borrowing against trust funds, but it does not seem likely that he will get his increase. The state Republicans are willing to let Michigan's troubles hurt Williams even at the expense of the state, but it is hardly likely that they are quite that willing.