Gov. John Kasich on Ohio's turnaround

Ohio’s Republican governor, John Kasich, appeared on “Fox News Sunday” this weekend to discuss his record in office.  He credited his state’s turnaround to Reagan-style policies: “Balancing budgets, being fiscally responsible, common-sense regulations, and tax cuts.”

“I like to say, if you have a restaurant and you don’t have any customers, you don’t raise your prices,” said Kasich.  “And that’s where Ohio was. And so what we’ve done is we balanced our budget, created this surplus, provided certainty, cut taxes for small business, killed the death tax and we have common sense regulations and we are engaged in workforce training. All these things coupled with certainty here in Ohio with what’s allowed job creators to feel comfortable and allow them to invest in our state.”

In contrast, Governor Kasich said the uncertainty generated by Obama Administration policies, such as the threat of further tax increases and “the problem of ObamaCare,” created “a drag on what is the natural healing process,” giving us years of sub-par recovery.

When Fox News host Chris Wallace noted some similarities between budget priorities for Governor Kasich and President Obama, particularly increased infrastructure spending and higher taxes on energy, business, and tobacco to offset an income tax cut, Kasich said he was looking for the best way to distribute the tax burden and encourage economic growth.

“We know even Ronald Reagan knew that there are some taxes that penalize economic growth,” Kasich explained. What we want to do is reduce that income tax. At the same time, giving people at the bottom an opportunity to have some tax reform and tax relief as well.  And so, Chris, we know that cigarette taxes – frankly, they’re aggressive.  Cutting the income tax is pro-growth.  You have got to have a tax system.  The question is, what is the tax system that allows you to collect revenue, but at the same time provides the greatest chance at economic growth?”

One of the trickier questions fielded by Kasich concerned his decision to accept the ObamaCare expansion of Medicaid, which put him at odds with many members of his own party.  He phrased his response as a disillusioned former Congressman critical of Washington, contending that the Medicaid funding was only in federal hands because it was taken from local taxpayers, so expanding the state program was a way to bring the money home: “I have a chance to bring back $14 billion in Ohio dollars back to Ohio to do what?  To strengthen our local communities as they treat the most significant problem of drug addiction and the problem of mental illness.  Now, I guess I could leave that money in Washington and leave it to those congressmen and senators to spend it wisely.  Unfortunately, I was there for 18 years, and I know what they do with that money.”

Prominent among the problems Kasich said he wanted to address through the expanded Medicaid program were drug addiction and mental illness.  He felt it was “entirely consistent with conservative and Republican philosophy” to use those funds to “lift people out of the ditch where they are, bring them into the mainstream, and give them an opportunity to realize their God-given purpose.”

Critics of the Medicaid expansion might counter that it wasn’t such good works they objected to, but the use of an already over-stressed federal program that looks like free money today, but will end up costing state governments a bundle down the line, even assuming the tapped-out federal government doesn’t modify the deal to leave them on the hook for even more of a co-payment.  Kasich seems confident that a rejuvenated Ohio economy will be able to handle the challenge.

He was eager to defend his income-tax reforms from class warfare criticism, countering the usual “tax cuts for the rich” assaults by observing that he’s increased the earned income tax credit and standard tax deduction, providing significant benefits for low-income filers.  He described this as a Reagan strategy.

“Give tax relief from the bottom up, and get that that top rate down, so we don’t continue to drive the most successful out of our state,” Kasich explained.  “As we cut the income tax rate, it helps small business because most small business people file their taxes as individuals, and as those taxes come down, it gives them more space to invest in their equipment.  It gives them more space to hire people.  And we believe that small business is one of the greatest engines of economic growth in our state, so lowering taxes will help us.  $12 billion has walked out of Ohio to lower or no income tax state since 1995.  And we aim to make Ohio the best state in the country.”

Although he took some lumps in an ill-fated effort to reform collective bargaining in his state – a reform program he says he won’t attempt again, since voters overturned it by referendum, and he feels the people of Ohio have therefore spoken on the matter – Kasich is looking good for re-election.  He originally won his office by only two points, but he’s currently up five over his Democrat opponent, Cuyahoga County Executive Ed FitzGerald.  FitzGerald has been reduced to the somewhat improbable strategy of convincing Ohio voters that if Kasich is re-elected this year, he’ll bail on Ohio in 2016 to run for President.  (Ohio Republicans have responded in kind by needling FitzGerald over all the jobs he’s quit during his quest for upward mobility.)

As with most politicians queried about a possible presidential run, Kasich said he was totally focused on the duties of his current office, while refusing to absolutely rule out a bid for higher office in the future, or sign a pledge not to run for President that FitzGerald has been touting.  It always seems tricky for either party to scare voters away by claiming the opposing candidate will do such a spectacular job in his next term that he might get poached by a presidential ticket.  Kasich joked about the improbability of such a scenario in his case: “You know, I tried to run for President in the 2000 election, and nobody would pay any attention.  Now all I’m focused on is Ohio, and everybody wants to talk about something else.”

Another dark rumor Ohio Democrats have floated against Kasich is that he harbors secret desires to take another swing at collective bargaining reform.  That’s an especially difficult case to make when the previous effort was overturned by referendum; the only conceivable strategy for success would involve a high-profile campaign to swing Ohio voters strongly in favor of the reforms, which is not the sort of thing a re-elected Governor Kasich is likely to pull out of his hat after spending an entire election insisting that the issue is off his radar screen.  If he really does aim for the White House someday, he’d face some criticism from Republican primary opponents for not being able to protect his reforms, and probably for that Medicaid expansion, especially if Medicaid is looking really bad in 2016.  On the other hand, a continuing record of accomplishments in Ohio following a successful re-election bid would draw considerably more attention than Kasich got in 2000.

Update: In case my head-scratching over Kasich’s “expanding Medicaid is conservative” argument isn’t strong enough medicine for you, Jason Hart at RedState flatly accuses Kasich of lying about the program during his Fox News appearance, particularly with respect to how the Medicaid expansion is paid for, and what would have become of the funds if Kasich had not over-ridden his legislature to accept the expansion.  Hart points out that abetting the ongoing transformation of Medicaid into a full-blown welfare program that includes “hundrreds of thousands of able-bodied childless adults” is not a conservative strategy.

I would add that the often-heard promise from pro-growth Republicans that we can grow our federal and state economies enough to handle government obligations is difficult to square with the sheer size of the unfunded liability mountains towering over our heads, from Social Security and Medicare to state pension funds.  I’m all in favor of economic growth, and efforts to get the American people on board with the policies necessary to sustain it, but we couldn’t pay off some of these federal debts if we annexed the entire planet and turned it into a supply-side paradise.