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States of bind

Economy | Republican governors spar over the content and the meaning of simulus package

Issue: "Wealth and poverty," March 14, 2009

WASHINGTON, D.C.-Minutes before television cameras rolled at a recorded breakout session of the National Governors Association meeting in Washington, D.C., a high-energy makeup artist patted Gov. Arnold Schwarzenegger's nose and forehead under the glare of bright lights. Another assistant brushed lint off the Republican governor's shiny gray suit and deep purple tie as audience members craned their necks to see the famous Californian.

During an on-camera discussion moderated by Robert MacNeil, former co-anchor of the long-running MacNeil/Lehrer NewsHour, Schwarzenegger joined Pennsylvania Gov. Edward Rendell, a Democrat, in praising President Barack Obama's economic stimulus plan, including the $135 billion slated for state governments. The pair wished the plan included more funding for infrastructure projects, and Schwarzenegger quipped: "We've got to come up with a sexier word than infrastructure."

After the broadcast Republican Gov. Mark Sanford of South Carolina sat on a padded bench in a dim hallway nearby, visibly weary from a -grueling schedule that includes duties as chairman of the Republican Governors Association. Bearing dark circles under his eyes, Sanford wasn't worried about finding sexier ways to talk about his opposition to Obama's stimulus plan. "We need to be telling the truth," he said. "There's going to be pain."

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Pain isn't a popular political -message, but even the most optimistic observers agree economic recovery won't be easy. There's far less -consensus on how to foster recovery, and the disagreements are particularly stark among one group: Republican governors grappling with their states' stakes in the massive stimulus bill. The two poles-represented by Schwarzenegger and Sanford-point to a deeper struggle within the party, and a tug-of-war for the identity of the GOP.

Every Republican House member voted against the president's $787 billion economic stimulus plan, and only three Senate Republicans supported the bill. But as political scientist Larry Sabato of the University of Virginia points out: "It's much easier to be an ideologue as a legislator." Political purism is harder for governors tasked with the day-to-day management of their states, says Sabato: "They're where the rubber meets the road."

So while Republican legislators can vote against funding, Republican governors must decide whether to accept or reject the funds. That's a tough spot for cash-strapped state leaders: States face a combined $270 billion in deficits through 2010, estimates The Center on Budget and Policy Priorities.

Still, a handful of the nation's 22 Republican governors insist increased spending doesn't solve economic problems. At least six GOP governors openly criticized Obama's stimulus plan: Sanford, Bobby Jindal of Louisiana, Haley Barbour of Mississippi, Sarah Palin of Alaska, C.L. Otter of Idaho, and Rick Perry of Texas. Sanford won headlines in February when he warned the country was moving toward "a savior-based economy"-what you see in authoritarian countries "where it -matters not how good your product is to the consumer but what your political connection is to those in power."

At least three of the six governors went further: Jindal, Barbour, and Sanford said they would likely reject portions of the funds for their states. Jindal announced he would reject $98.4 million in federal incentives to expand unemployment coverage. Barbour said he's likely to make a similar decision, and Sanford said: "I would say that it's probably a no-brainer that we would likely be in the same spot."

The governors focused on unemployment insurance because the stimulus bill attaches strings to the federal aid: Accepting the funds would require states to extend unemployment benefits to part-time workers and would increase employer taxes. "It would be like spending a dollar to make a dime," said Jindal.

Sanford agrees, saying his state's employment commission already asked his office to endorse more than $300 million in federal loans to pay for unemployment benefits in South Carolina because the commission didn't have sufficient funds: "It's nonsensical to think that the only way we can be -eligible for federal funds is to expand the program to part-time workers-which we've never done before-when the program can't pay for the current level of benefits."

Other Republican governors are grappling with other parts of the plan, though they haven't announced whether they'll reject any of the funds. Indiana governor Mitch Daniels said he's worried about how his state will fund expanded education, welfare, and health-care programs once the federal dollars are gone. "Some school systems will see a gusher of money the like of which no one has seen before," said Daniels. "When the federal funds stop coming, there will not be any way to replace all that."

Critics of the Republican governors opposed to Obama's plan said the leaders should prove their fiscal convictions by rejecting all the funds offered to their states. But Sanford disagrees: "I fought as hard as I could, and I fought for a long time. But those of us who wanted to derail the stimulus lost." Sanford said he wouldn't block all the funds passed by Congress but will consider rejecting funds that could harm the state or prove particularly wasteful.

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