The Department of the Treasury and the Internal Revenue Service released new guidance that is “designed to expand the use of income annuities in 401(k) plans.”
June 01--More than any of the other Republican governors elected with him in 2010, Ohio'sJohn Kasich remains a mystery even to those who follow state politics closely. Which Kasich is the real one? Is it the conservative ideologue who gutted aid to cities and signed a bill that restricted bargaining rights for public employees? Or is it the centrist with a compassionate streak who expanded Medicaid rolls over the opposition of the Republican legislature?
For many governors in the heat of a campaign for re-election, a reputation as an enigma would be something to worry about. For Kasich, it may well be an advantage.
Many of those who have listened to Kasich's more recent speeches and rhetoric tend to place him on the moderate side. Last year, before he passed his Medicaid expansion, Kasich lashed out against "this notion that if somebody's poor somehow they're lazy" and what he called a rising belief that "those who do not have are somehow lesser than those who have," interspersing those broadsides with biblical references and examples of the kinds of people expanded health coverage would help.
That speech and others have brought the 62-year-old governor national attention as a possible exemplar of the "compassionate conservatism" once expounded by President George W. Bush. But his Ohio critics, and especially the Democrats, think of the "compassionate Kasich" as nothing more than a transparent re-election strategy. "He was quoted in The New York Times as saying there was a 'war on the poor' going on," says Ed FitzGerald, the executive of Cuyahoga County and Kasich's Democratic opponent. "He made those comments roughly at the time he was cutting food stamps. He understands there's a political advantage to being perceived as a moderate, but he has an extreme record on a number of issues."
There is no shortage of evidence for those on either side of the "Who Is Kasich" argument. The governor has presided over new abortion restrictions, limits on voting participation, curbs on food stamps, income tax cuts that benefit the wealthy, and large cuts to local government and education. He has also passed the state's first earned-income tax credit, reformed prison sentencing, mandated insurance coverage for autism, commuted death sentences, boosted funding for food banks and proposed tax hikes on energy producers. "I'm not quite sure at what point you become 'compassionate,'" says House Speaker Bill Batchelder, a Republican who's known Kasich for four decades. "I know he wants to have a legacy that shows he provides for citizens who have difficult circumstances, and more importantly for young people who need the opportunity to work."
The campaign leading up to November will be one in which Kasich's opponents seek to undermine his flashes of independence from GOP orthodoxy as blatant posturing in a politically divided state where no one wins with the votes of party loyalists alone. Meanwhile, Kasich and his backers will say the whole "Who Is Kasich" argument misses the point -- that the governor has never been anything other than a steely, pragmatic Republican who does what he thinks is right, issue after issue.
A lot has changed since Kasich's tumultuous and somewhat combative first year in office. Just days after his 2010 win, he gathered lobbyists for a luncheon and said he would listen to them, but added, "If you're not on the bus, we'll run over you with the bus. And I'm not kidding."
Ultimately, the group that felt the most run over by Kasich's first budget was local government, which lost more than $1 billion through direct spending cuts and the elimination of the estate tax, 80 percent of which fed Ohio's vast network of counties, municipalities and cities. Cuts to K-12 funding totaled $700 million.
The exact impact of Kasich's cuts to localities and education is hard to assess. But numerous local governments have had to eliminate jobs, raise taxes or cut back on services provided. Some have had to do all three. The city of Springfield, in southwestern Ohio, for instance, is no longer able to put $1 million a year toward its roads, nor can it invest in a downtown parking garage demanded by businesses, or an industrial park -- at least not without raising taxes. The city's leaders, like others across the state, want the governor to restore some funding from the state's rainy day fund, which Kasich has built to an all-time high on the theory that it signals strong fiscal health to businesses considering a move to the state. "He doesn't have a clue of what it's like for us at the local level," says Springfield Mayor Warren Copeland, a Democrat. "It may be there's some fat that needs to be cut in suburban Columbus, but most of the cities of Ohio are older industrial cities. There's not a lot of fat to be cut." Copeland and others fault the governor's record: He started his career at the state level, moved quickly to Congress, and never served in local office.
Kasich has steadfastly defended the cuts, downplaying their severity while insisting that local governments need to become more efficient. Other defenders note that, as a home-rule state, Ohio grants broad latitude to local governments to adjust their operations or make up revenue.
While the reductions in local aid may have been the most consequential action of Kasich's first year, the best-publicized act by far was Senate Bill 5, stripping the state's public employee unions of the bargaining rights they had long enjoyed. Restricting the bargaining rights of unions wasn't a major issue in the 2010 campaign, but an emboldened Republican legislative majority started pitching new restrictions even before Kasich's inauguration. The eventual Senate Bill 5 included curtailed bargaining for police and firefighters, a provision even some members of the GOP warned was unwise. Aided by resentment against the new law from police and fire unions, voters repealed Senate Bill 5 in November 2011 with 62 percent support, a humbling defeat for the governor as well as the legislature.
After the defeat on collective bargaining, the typically defiant Kasich struck a notably conciliatory tone. The governor said he'd heard the voices of his opponents and wanted to move on. "My view is when people speak in a campaign like this, in a referendum, you have to listen," he told reporters after the loss. It's a tone he still employs today when asked about the 2011 referendum, pivoting reflexively to the Ohio economy, which has improved under his watch. "I think after Senate Bill 5 was done, he got about the job of being governor," says Jerry Austin, a Democratic consultant. "And the job of the governor in Midwestern states, particularly Ohio, has been about jobs." Austin is among a number of Democratic and Republican strategists who think the economic progress on Kasich's watch, though sluggish, combines with his more centrist decisions and public image to put him in a strong position for re-election.
Over the year following the referendum to recall Senate Bill 5, the unemployment rate in Ohio dropped nearly half a percent and the economy added about 66,000 jobs. Those figures were actually less impressive than those of his first year in office, which has fueled arguments that Kasich benefited from the ground his Democratic predecessor laid. Nevertheless, the cumulative sense of recovery buoyed Kasich's approval ratings. By January 2013 his approval hit 53 percent, nearly the highest of his tenure, and it has remained stable. A governor whom Democrats savored the chance to unseat suddenly looked tough to beat.
But Democrats are quick to point out that the rate of job growth has been dropping off, sinking to just under 1 percent in Kasich's third year in office and continuing to move at a slow pace. In their view, a recipe of tax cuts and a privatized economic development agency haven't produced the kind of results that would justify the spending austerity Kasich and his administration implemented. Nationally, non-farm jobs have grown 5.4 percent since Kasich took office, compared with 4.4 percent in Ohio.
The second Kasich budget, issued last year, continued the tax-cutting approach. It pitched another 20 percent cut in income taxes over three years, paid for in part with a broad expansion of sales taxes, which are generally considered regressive because they cost poorer people a larger share of their money. Legislators agreed to an increase in sales taxes but not to the expansion, and they halved his income tax cuts. With a much-improved revenue situation, Kasich instead poured money into the state's rainy day fund. This year, he hopes to cover another $2.2 billion in tax cuts by raising the commercial activity tax (Ohio started phasing out corporate income taxes in 2005), collecting severance taxes on energy production and imposing an increase in the cigarette tax. "It's not tax relief; it's a tax shift," says Rep. Tom Letson, a Democrat from Warren. "And much more of the onus on the state of taxes in Ohio has been put on middle and lower-income people."
FitzGerald, Kasich's Democratic challenger, says if elected he'll make restoring cuts to local government a top priority. He's the first chief executive of Cuyahoga County, the state's largest and the home of Cleveland, a bastion of Democratic politics. FitzGerald came to power in the wake of a federal corruption raid on county offices, and since then he's worked to clean up local government, create a massive new economic development fund and save the county money by reorganizing the government.
Democratic Cuyahoga County Executive Ed FitzGerald (David Kidd/Governing)
FitzGerald's campaign focuses on those cuts to local government and a number of issues that have inflamed Democrats in Republican-controlled states since the 2010 GOP takeover, including abortion, voting rights and, as one might expect, collective bargaining. Democrats and unions are reminding voters in Ohio that Republicans introduced two new antiunion "right-to-work" bills in the legislature. So far, Republican legislative leaders have stifled those bills, and Kasich has sidestepped questions about whether he'd sign such bills in the future. "It's not on my agenda," he told a gathering of journalists at an Associated Press forum in Columbus earlier this year. (Kasich did not make himself or his advisers available to be interviewed for this story.)
Given the shelf life of political issues, it is an open question whether collective bargaining will bring voters to the polls as it did in 2011, but police and firefighter unions -- two of the major organizing blocs behind the repeal of Senate Bill 5 -- promise they'll remind voters about it as much as possible. The International Association of Firefighters has pledged $20 million for political races this year, specifically targeting some of that money toward opposing Kasich. At the grassroots level, the Ohio Association of Professional Firefighters and the state Fraternal Order of Police will actively hit Kasich on cuts to local government and on unionization. "I think he's tried to look like he's moderated, but we believe differently and we think given another four years certainly he may retake his position," says Mark Sanders, president of the state firefighters' union. Sanders and supporters routinely point to the case of Michigan Gov. Rick Snyder, a Republican who similarly insisted antiunion "right-to-work" legislation wasn't on his agenda, but then sided with his legislature and signed a bill.
Kasich has certainly shown a willingness to go against his legislature, though, most notably by vetoing language in the 2013 budget bill that would have prohibited Medicaid expansion. And when the governor staged a successful end-run around the legislature, expanding Medicaid by administrative action, the Tea Party went ballistic, even drumming up a short-lived bid to unseat Kasich in a primary. But brushes like that have only strengthened Kasich's image of independence. It's an image that's bolstered by a congressional career in which he pushed to limit "corporate welfare" and cap a defense spending program. But during that congressional career he also pushed to tie work requirements to food stamps, and as governor he rescinded a long-standing federal waiver that allowed the state to keep people in the program who live in areas of high unemployment.
Despite widespread suspicion about the more compassionate Kasich among most Democrats, some who work directly in social services seem willing to take him at face value. Lisa Hamler-Fugitt, the executive director of the Ohio Association of Food Banks, says that while Kasich pushed thousands off food stamps, he has not only increased state spending on other food programs by $18 million but has established weekend and summer backpack programs for kids as well as mobile farmers markets. To Fugitt and others, Kasich has been consistent in his views on social programs, and they may not agree with every decision, but they believe he made a "game-changing" move with Medicaid expansion. "I find nothing about his passion about reducing poverty to come from a cynical place," says Gayle Tenenbaum, a former Democratic aide and activist. "That comes for him from a very scriptural place, and I don't find that to be anything but genuine John Kasich." And unlike past governors both Republican and Democratic, Kasich took on members of the powerful nursing home lobby, lowering their Medicaid reimbursements and moving more seniors to community-based care, which many human service advocates prefer. "I saw four administrations -- two Democrats, two Republicans -- try really hard, and they never got it done," Tenenbaum says. "By golly, he did."
Kasich has also worked hard to peel off Democratic and independent voters in FitzGerald's own turf, knowing that winning overwhelming support in Cuyahoga County is critical to his opponent's path to victory. He's helped push a school improvement plan through the legislature, turned over a state park to local control and pushed for key infrastructure improvements in the area. He's also nurtured a relationship with long-time Columbus Mayor Mike Coleman, so much so that when the Democratic mayor officially endorsed FitzGerald, media coverage centered on why Coleman had waited so long.
No one can say that Kasich's victory is assured, especially since FitzGerald's name recognition is growing in the state, and some recent polls have shown the race to be a virtual tie. But Kasich will be difficult to unseat. FitzGerald himself says he's likely to trail the governor in fundraising throughout the race, and national donors have other priorities this election cycle, namely holding on to the U.S. Senate. That might be different if Kasich appeared more vulnerable, but it's no longer 2011. "It's a long time between now and there," says Gene Beaupre, a political scientist at Xavier University, "but it would take an awful lot to make the odds makers put it anywhere but on Kasich's side."
(ASTERISK)Source for chart above: Bureau of Labor Statistics, January 2011-March 2014
Chris Kardish -- Staff Writer
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