Dear Governor Granholm:

Congratulations on your re-election. You rolled up a remarkable winning margin -- 533,409 votes -- against a fantastically well-funded opponent. That establishes you as the most gifted political communicator in recent Michigan history.

With the House of Representatives now Democratic (led by Speaker- designate Rep. Andy Dillon (D-Redford), a smart and sensible guy) you are much better positioned with the legislature than you were during your last term when the Republicans ran things.  Back then, they were darned if they were going to let you get anything done for fear you'd take credit for it during the campaign. This time around, I'd guess both the House and the Senate will be less partisan and more inclined to collaborate.

They'll need to. Michigan is facing its worst economic crisis since the Great Depression. The University of Michigan's economic forecasters have just issued a very gloomy prediction. They think our state will likely lose another 24,200 jobs next year and 9,200 more in 2008. That will mean eight straight years of job losses.

By the end of this year, according to those highly respected economists, Michigan will have lost a net total of 170,000 manufacturing jobs since 2001.

True, we've seen worse. The state lost nearly 15 per cent of our jobs back in the early 1980's, double today's loss, but then the employment outlook improved sharply as the auto industry surged. It won't this time around. General Motors, Ford and Chrysler should sell around 8.8 million vehicles this year, two million fewer than in 2001.

All this brings me to the decisions you face in your political and legislative agenda for the next four years.

You have two basic choices. You can be bold, setting out a far-reaching agenda for restructuring our economy and laying the foundation for our future prosperity in a rapidly globalizing world.

Or you can be cautious and non-confrontational, limiting your reforms to baby steps. Given that big-time but highly necessary changes are easier to make at times of crisis, I urge you to be bold.

Some of the main issues:

1. Taxes: Sure, the $1.9 billion hole in the General Fund created by the repeal of the Single Business Tax will have to be filled. But you have a terrific opportunity to go further and force a hard look at structure of our entire tax system. Should the rate of the sales tax be reduced and the base broadened to include services? Should the personal property tax which hurts capital-intensive industries like manufacturing be reduced? Should the income tax be made progressive so richer people pay more? These things need to be looked at -- hard.

2. Education: The Cherry Commission you appointed several years ago recommended we double the percentage of our high school leavers who go to college, but nobody discussed how to pay for it. You've said you want to increase the merit college scholarship plan to $4,000, and you can probably get that through the legislature. But why not go a bold step further? The "Kalamazoo Promise" pays full tuition to all graduates of the Kalamazoo public schools. Why not look to see if there is a way that could be scaled up to create the Michigan Promise? A GI Bill for all Michigan citizens, whether kids leaving school or laid-off workers looking for serious retraining, would have a profound impact on our economy.  A profound impact, that is, for decades to come.

3. Budget and Spending: Tom Clay, the respected director of state affairs for the Citizens Research Council of Michigan, has just finished a new study of our budget situation. He points out that Michigan has faced a chronic structural billion-dollar-plus budget deficit for the past six years. Now, all the relatively painless one-time accounting fixes to balance the budget have been used up. So he concludes that -- unless serious changes are made -- the budget deficit will certainly balloon over the next decade, causing a "fiscal train wreck." Sure, you can probably cobble together a budget fix for the next fiscal year. But wouldn't it make more sense to  take a hard multi-year look at our financial affairs? One small example, compared to our neighboring states, we imprison more people for longer periods of time. If our incarceration rate were only average, we'd spend $500 million less each year on prisons. Could we adjusting sentencing guidelines fix this?

4. Public Investments: Businesses in trouble take a hard-eyed look at investments to beat the competition. We should do so, too. We ought to concentrate on our "enduring assets," those that can't be moved, those that help us compete worldwide. Instead of cutting back state support for universities (especially research-oriented ones), we should be investing in them.  Instead of paying lip service to the environment, we ought to invest in our "North Coast" resources such as the Great Lakes. We shouldn't do this to please the "tree huggers." We should and must do it because the lakes and a healthy environment represent the future of economic development in our region.

William Shakespeare had it right in Julius Caesar:

There is a tide in the affairs of men, Which, taken at the flood, leads on to fortune; Omitted, all the voyage of their life Is bound in shallows and in miseries.

What you achieved in the election is very, very rare: A mandate. Use it boldly, and you'll go down as a great governor. Waste it in timidity and caution, you'll be remembered, if at all, as not much more than average.

With every good wish,

Phil Power

Phil Power is a longtime observer of politics, economics and education issues in Michigan. He would be pleased to hear from readers at ppower@hcnnet.com. Phil Power is president of the Center for Michigan. However, these opinions and others expressed in Phil Power's columns are individual opinions and do not in any way represent official policy positions of the Center for Michigan.