R epublican governors in the heartland are taking an economic victory lap for what might be called the Midwestern miracle: Ohio is gathering speed, Indiana’s on a roll, Michigan is achieving the unbelievable and Wisconsin—well, according to Gov. Scott Walker, “the Wisconsin Comeback is working.”
What—you thought this was President Obama’s recovery?
It’s an article of history, almost of faith, that a rising economy benefits the president, his party and its White House ticket. And there’s plenty to brag about: The national jobs report for February was greeted with adjectives that ran the gamut from “strong” to “wow” to “barnburner.” “The United States of America’s coming back,” Obama said Wednesday in Cleveland, and that should be good news for the 2016 Democratic presidential nominee.
But there’s a wild card—make that four wild cards—as the 2016 cycle gets under way: four Republican governors from potentially competitive Midwestern states who are considering presidential bids and, short of that, would make solid vice presidential picks. They are presiding over economies far better than the ones they inherited, and any one of their states could be the tipping point for a GOP presidential nominee next year.
These governors are claiming the resurgences as their own in narratives that don’t mention Obama or the federal government, except as impediments. Yet economists say they are able to call the state of their states “strong” in large part because of the policies Obama muscled through to strengthen the safety net and prevent collapse on both Wall Street and Main Street. To paraphrase Texas populist Jim Hightower’s famous quip about George H.W. Bush at the 1988 Democratic convention: These governors were born on third base and they’re claiming credit for hitting triples.
The irony is rich given that Obama confronted a solid wall of GOP opposition to most of the steps he took, not least from Indiana Gov. Mike Pence, then in Congress. And it is not lost on Obama. He tweaked Republicans on Wednesday for predicting that his policies would “crush jobs and explode deficits and destroy the economy forever,” when the opposite has happened. On top of that, three of the governors potentially eyeing his job—Walker, John Kasich in Ohio and Rick Snyder in Michigan—rode in on the conservative 2010 wave fueled by anger at Obama, the economy and the Affordable Care Act. Obama’s efforts may have helped produce both a Republican ticket and the record for it to run on.
Natural cycles and the steep drop in oil prices have a lot to do with the improving health of the economy, of course. And the governors are doing their best to stoke trade and bring businesses to their states. Wisconsin and Michigan both ranked in the top five states for hiring climates last year on Gallup’s job creation index.
“This administration’s policies are sapping our national vitality and threatening our prosperity,” Pence said at the Conservative Political Action Conference. But that ignores the impact of the stimulus policies—the “big government”—that Obama put in place in his first two years. The relatively slow U.S. recovery has been on fire compared with what’s going on in the Eurozone, where government belt-tightening has been the norm and unemployment remains above 11 percent. U.S. indicators are increasingly positive, meanwhile, and optimism about the economic outlook is growing. “We have emerged from what was a once-in-a-generation crisis better positioned for the future than any of our competitors,” Obama said in Cleveland on what amounted to his own victory lap.
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Walker, who is doing well in Iowa and New Hampshire polls of the GOP field, is the sitting governor who for now appears most viable and likely to run. His economic talking points include a 5.0 percent unemployment rate (lower than the 5.5 percent national rate), 18,000 new Wisconsin jobs created last November (the most since 1990), and more total jobs than before the recession (16,700 as of a Jan. 22 tweet from Walker). Walker attributes the growth to “tough but prudent reforms” and getting government “out of the way.”
But the state added only about 139,000 private-sector jobs in Walker’s first term, far short of the 250,000 he pledged to create. In addition, while Walker likes to contrast the current jobless rate with the state’s high of 9.2 percent, that peak was in January 2010, a year before he took office; the rate was 7.7 percent when he was inaugurated in January 2011. Moreover, the downward trend began as a result of the $800 billion American Recovery and Reinvestment Act—the massive 2009 federal stimulus package that poured money into green energy, schools, infrastructure, health technology and services, state and local governments and tax cuts for businesses and individuals.
Walker faced a $3.6 billion deficit when he took office, due largely to his predecessor’s use of “one-time stimulus funds to pay for ongoing expenses,” spokeswoman Laurel Patrick told me, adding that this makes it hard to argue that the stimulus played a role in Wisconsin’s recovery. But Marc Levine, founding director of the Center for Economic Development at the University of Wisconsin-Milwaukee, says Walker was “surfing on the impact of the stimulus” in his early months. Wisconsin’s share of the money resulted in a 50 percent increase in federal dollars coming into the state and helped push Wisconsin into the top 20 states for job growth in 2010. “We came out of the recession much more rapidly than other states,” Levine said. “My view is the stimulus played a very important role.”
Richard Stock, director of the Business Research Group at the University of Dayton, offers a similar analysis of the Ohio economy. More than 10 percent of the labor force—586,000 people—was unemployed in 2010, he recalls. “It is difficult to describe how awful it was,” he says. “There’s no question that the stimulus definitely was extremely important in helping the state recover,” particularly the money that flowed to infrastructure projects and state and local governments.
The Ohio unemployment rate was 5.1 percent in December and January. Stock says that is partly because the labor force has shrunk by more than 100,000, and at least some of the shrinkage is due to older workers forced into early retirement by layoffs, shutdowns and difficulties finding new jobs. Furthermore, he says, as in Wisconsin and across the nation, the new jobs in Ohio are not comparable to the high-wage manufacturing jobs that were lost. Levine cites similar asterisks in discussing the Wisconsin unemployment rate and Walker’s job creation record. The growth of jobs and the Gross Domestic Product “has been inferior compared to national rates” and to trends in most neighboring states, he said.
Kasich and especially Snyder, facing the bankruptcy of Detroit, had the steepest challenges—though they took office after the worst had passed. Ohio was at peak joblessness of 10.6 percent for seven long months, from July 2009 to February 2010. By the time Kasich was inaugurated nearly a year later, the rate had inched down to 9.1 percent.
Michigan’s unemployment rate topped out at 14.2 percent in August 2009; it was 11 percent when Snyder took office in January 2011 and 6.3 percent in January.
Pence took office in January 2013 when the Indiana jobless rate was 7.9 percent; its high was 10.8 percent in June 2009.
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