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NEW DIRECTION: McKenna, left, greets a guest at a neighborhood picnic in Seattle’s White Center neighborhood.
Associated Press/Photo by Ted S. Warren
NEW DIRECTION: McKenna, left, greets a guest at a neighborhood picnic in Seattle’s White Center neighborhood.

Revenge of the over-regulated

Politics | Republicans, pointing to the success of free market policies in Virginia, are poised to make historic gains in governorships across the country

Issue: "Race to the finish," Nov. 3, 2012

SEATTLE—In 1980 CNN launched on cable, Pac-Man hit the arcades, and moviegoers learned that Darth Vader was Luke Skywalker’s father.

That was also the last year a Republican became Washington state’s governor. That election occurred so long ago that most Washingtonians probably don’t even remember his name (John D. Spellman, who lost his reelection bid four years later). Ask Washingtonians about 1980 and they mention Mount St. Helens, which erupted 96 miles south of Seattle.

Now after seven election cycles and four straight Democratic governors, state Attorney General Rob McKenna, 50, is seeking to end the nation’s longest string of Democratic governors.

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It’s easy to dismiss his bid. President Obama holds a lead of at least 16 percentage points over Mitt Romney in state polling on the presidential race. Both of Washington’s U.S. senators are Democrats. Despite this history, most pollsters say McKenna’s race against Democrat Jay Inslee, a former U.S. congressman, is a tossup. Seven of the other 10 states with gubernatorial races this year also have seats held by Democrats, and Republicans are on the offensive.

The governor’s races in New Hampshire and Montana are tossups, Republican Pat McCrory has a double-digit lead in North Carolina, and incumbent Democratic governors running for reelection in Missouri and West Virginia are facing competitive challengers. In New Hampshire, North Carolina, and Washington, incumbent Democrats chose to step down rather than run for reelection.

Washington’s McKenna exemplifies the conditions favoring Republicans. The state’s 8.6 percent unemployment rate is the nation’s 15th worst. When the federal Bureau of Labor Statistics includes those who are underemployed or have given up looking for work, the rate jumps to 17 percent. Washington’s voters are asking the same question as voters in other states: How can the gubernatorial candidate get people back to work?

McKenna says three decades worth of state regulations have buried Washington businesses. At a recent campaign appearance at a high-rise building in downtown Seattle, he told business leaders he understands their pain: “Every day you get up and work hard to make your company successful and every day someone is trying to eat your lunch. … That’s the essence of competition.”

Early in 2012, while many focused on presidential primaries, McKenna held more than a dozen small business forums around Washington. The nearly 500 business leaders he met gave him the same feedback: Rising healthcare costs combined with government regulations were making it too expensive to grow their businesses and hire more employees.

During the past three years, Washington state officials have adopted more than 4,000 new permanent business regulations. Business owners in Washington must navigate more than 100,000 requirements, according to the Washington Policy Center. Overall, the regulations fill 32 phone-book-sized volumes that stacked together are more than 5 feet tall. The state auditor released a report this fall faulting the state’s 26 regulatory agencies for not streamlining a “dense regulatory environment” that hampers small businesses the most.

McKenna’s Democratic challenger Jay Inslee is promising to focus on job creation. His stump speeches offer a top-down, government-centered approach. He would create new government departments, including an Economic Competitiveness and Development office with a cabinet-level director. His plan to get the government more active in clean energy and shipbuilding industries includes establishing new state agencies focused on biofuels and marine innovation.

McKenna and other GOP gubernatorial candidates around the country are attacking this pervasive government-first attitude and finding receptive audiences. “If you are in a room with a group of business leaders and you say the magic words ‘Washington State Department of Labor & Industries’ their temperature goes through the roof,” said Paul Guppy, a vice president at the Washington Policy Center.

McKenna pledges to conduct a government-wide review of state regulations, arguing that government regulators have an incentive to fight for outdated, onerous rules that give them job security. McKenna also touts a tax break for 118,000 small businesses that would save them a combined $250 million a year. With Washington one of just four states that do not open up their worker’s compensation system to private competition, McKenna vows to break up the government’s insurance monopoly and let employers choose between state-run and private options.

A new poll by the National Association of Manufacturers and the National Federation of Independent Business found that 69 percent of small business owners and manufacturers say regulatory policies have hurt American small businesses and manufacturers. Other Republican candidates are echoing the call for regulatory reform. “We need to find a way to get government to work with people, rather than be a barrier,” said Republican Rick Hill during the first gubernatorial debate in Montana.

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